Danone reports 4.7% hike in third quarter sales

19 Oct 2017

Danone has announced third-quarter consolidated sales were €6,454 million, a 4.7% “like-for-like New Danone” increase, reflecting a 0.4% increase in volume and 4.3% increase in value.

Danone reports 4.7% hike in third quarter sales

Danone has announced third-quarter consolidated sales were €6,454 million, a 4.7% “like-for-like New Danone” increase, reflecting a 0.4% increase in volume and 4.3% increase in value. Reported sales were up 16.6%. For the first nine months, consolidated sales stood at €18,582 million, up 2.1% on a “like-for-like New Danone” basis while reported sales were up 12.0%. Danone reaffirmed expectations that it will deliver full-year double-digit recurring earnings-per-share growth at constant exchange rates, above 12%.

“As expected, Danone has posted accelerated sales growth in the third quarter,” said Emmanuel Faber, Chief Executive Officer. “This reflects the strength of our portfolio of cohesive consumer health-focused brands and a solid execution against our strategy, with a step-up in innovation and activation plans. The increase in like-for-like sales has been underpinned by the allocation of additional resources to serve rising demand in Specialized Nutrition, especially in China. Strong headwinds remain in Brazil which continue to impact EDP International negatively. The integration of WhiteWave is on track and starting to deliver results. “

“Our increased resource-allocation ability, served by an adaptive organization, will enable us to pursue our decoupled growth and efficiency agendas to generate profitable growth in the coming periods. This confirms my confidence in meeting our objectives for the year, delivering solid shareholder returns and positioning the Company for long-term sustainable growth, fully embracing the opportunities of the ongoing Alimentation Revolution.”

Cécile Cabanis, Chief Financial Officer, said: “Our trading performance in the first nine months illustrates the progress of our growth and efficiency agendas, which enables us to confirm our guidance for 2017”.

While there are improving fundamentals in several parts of the business, Danone said that it assumes that economic conditions will remain volatile and uncertain overall, with persistently fragile consumer trends or even deflationary consumer trends in Europe, and specific contextual difficulties in a few major markets, including the CIS and Brazil.

As previously reported, Danone anticipates a year-on-year mid-single digit rise in the costs of its strategic raw materials. In this context, the company says it will continue to strengthen the resilience of its model through a range of initiatives aimed at offsetting inflation and limiting its exposure to volatility in some raw materials while ensuring the competitiveness of its products.

More specifically, Danone now anticipates a year-on-year steep rise in milk prices, with variations from one geographical area to the next: a mid to high-single digit increase in Europe and the United States, and a strong rise in emerging countries, such as the CIS, and Latin America.

Regarding other raw materials, including plastics, sugar and fruits, Danone also anticipates inflationary conditions overall.

Given this outlook, Danone says that it will continue to prioritize initiatives and resources to accelerate growth, improve margins and strengthen its growth model.

“We will continue to be agile and disciplined in our resource-allocation process to ensure short term delivery, transformation for the long term and sustainable value,” said Cabanis. “This will be aligned with our continued and disciplined resource allocation to promote strategic growth opportunities over short term tactical allocation”.