Danone sees 5.3% decline in Dairy volume

25 Apr 2017

Danone has reported its first quarter results. The Fresh Dairy Products division reported sales down -2.3% like-for-like, including a -5.3% decline in volume and a +3.0% rise in value.

Danone sees 5.3% decline in Dairy volume

Danone has reported its first quarter results.

The Fresh Dairy Products division reported sales down -2.3% like-for-like, including a -5.3% decline in volume and a +3.0% rise in value.

In Europe, sales continued to be impacted by difficult market conditions and Activia’s performance. As announced in February, Danone says it is implementing all necessary initiatives to reverse this trend. Local execution plans are being reworked (packaging, communication campaigns and activation) and will be rolled out gradually, country by country in the course of the second quarter. They will be complemented by new product launches in Activia’s range. In parallel, local brands such as Les deux vaches in France, Danio in Poland and in Italy as well as Oikos in Italy have continued to be successfully developed, Danone said.

Within the CIS and North America region , Danone generated stable growth. In the US, slower category growth and price pressure from competitors weighed on first-quarter sales. Backed by strong brands, market leadership and reinforced communication and innovation plans, Danone said it will continue to pursue its growth agenda as planned in 2017. In Russia, Danone notes that it once again demonstrated its resilience, in a consumption context which remains difficult. The enhancement of its brand portfolio’s value through rising prices and very positive mix management continued to offset a decline in volumes in lower-end segments, the company said.

The ALMA region reported a slightly negative performance, as consumption trends in Brazil worsened. Danone says that initiatives are being rolled out to boost the brand portfolio and protect the profitability equation. These include a Portfolio Revenue Growth Management (PRGM) program aimed at optimizing the product mix, establishing the best price-promotion-format positioning for each brand. At the same time, communication plans are being adjusted and innovation projects reinforced.

“Q1 has been an important time for all teams at Danone,” said CEO Emmanuel Faber. “As anticipated, sales are showing a slow start to the year. In a continued volatile environment, we have made progress on our key priorities across our categories. In particular, to address headwinds and sub-optimal execution in the Fresh Dairy category in Europe, which sequentially impacted our performance, we continue to adapt our plans. In addition, in a matter of only a few weeks, we simplified our global organization, and localized further our decision-making. This new organization allowed us to decouple the company’s growth & efficiency agenda, with the Protein program launched to support both our short term results and our growth journey.”

“At the same time we are entering into a new chapter with the acquisition of WhiteWave. With leading positions in some of the fastest-growing, health-focused global categories, this combination will drive our Alimentation Revolution, our business performance, and will accelerate our 2020 profitable growth journey. I am particularly impressed with the performance of Alpro in Europe, which paves the way to a successful rollout across many more countries in the future. In the US, last week's closing ended a prolonged process which caused growing managerial and business disruptions in a low growth context for the food sector. The combined experience and capabilities of the DanoneWave management team and the extensive work done by the integration team since July will fully deliver our synergy plan from day 1, address the current business challenges, and capture the business opportunities ahead starting from H2.”

“I am therefore fully confident that we will drive strong value creation from the WhiteWave acquisition, and deliver the attractive financial benefits we outlined last July. Reflecting this in the short term, we are now upgrading our Danone FY 2017 guidance to double-digit recurring EPS growth at constant exchange rate.”

“2017 is a year of construction that will strengthen Danone as an even more resilient company, best prepared to seize tomorrow's opportunities, with the right portfolio of products and brands to serve our consumers meaningfully in a balanced array of geographies. And with fully committed teams,” concluded Faber.