Danone sours views despite sales jump

Marion Dakers
FRENCH food group Danone warned yesterday the economic landscape would continue to hit sales in Europe, as it posted a 15 per cent growth in third-quarter revenue to €4.35bn (£3.86bn) after strong dairy sales in emerging markets.

The world’s biggest yoghurt maker maintained its full-year targets after offsetting a 2.1 per cent like-for-like sales growth in Europe with 15 per cent growth in Asia in the quarter.

“Danone assumes that the financial, economic and social crises will continue to weigh on consumption in Europe, while emerging markets are expected to keep developing well,” the group said.

Shares in the company rose 4.9 per cent to €45.49 in Paris trading, the second-largest gainer on the CAC 40 index of French blue chips and close to a three-month high for Danone.

Danone also said it would buy back around €500m of its shares, possibly from this year, with cash from the sale of non-strategic stakes in Chinese group Huiyuan and Russian company Wimm-Bill-Dann.

All four of Danone’s four divisions enjoyed solid quarterly growth, with its water products posting particularly strong sales due to a hot summer in Japan and across Europe.

“[The results statement] confirms our expectations that 2010 should be a fairly strong year for Danone,” Bernstein Research analyst Andrew Wood said. “Danone is on its way to delivering strong, best-in-class top-line growth and balanced operating performance consistently following several years of turbulence.”

Danone kicks off the earnings season for Europe’s food giants, with Nestle due to report today and Unilever on 4 November.