Wednesday 26 February 2020 9:56 am

Danone cuts forecasts over coronavirus fears

French food giant Danone this morning lowered its sales and profit margin forecasts for this year as it warned on the impact of coronavirus.

The figures

However, Danone’s shares rose  per cent this morning after it reported 2019 like-for-like sales growth of 2.6 per cent to €25.38bn

Read more: Danone stays on track despite falling Chinese birth rate and Moroccan protests

Earnings per share growth last year was 8.3 per cent to €3.85 and operating income increased 7.4 per cent to €3.84bn.

Danone’s operating margin was up 168 basis points to 12.8 per cent. 

Free cash flow increased 12.5 per cent to €2.51bn. 

Why it’s interesting

The company, which owns the Activia yogurt and Evian water brands, said the coronavirus outbreak would cause lost sales of €100m, driven by losses in its water business in China. 

It said it was targeting like-for-like sales growth of two to four per cent in 2020 and an operating margin above 15 per cent, compared to its previous target of four to five per cent sales growth and 16 per cent operating margin. 

“We start this year under the uncertain clouds of the coronavirus,” chief executive Emmanuel Faber said.

“Our priority is on the health and safety of our employees, business partners, customers and the communities in which we operate, hand in hand with the work of authorities. 

“I would like in particular to commend and deeply thank our teams in China for their incredible commitment to their mission serving relentlessly families, parents, babies and elderlies despite the difficult conditions. 

Read more: Coronavirus: Guinness owner Diageo warns on £200m profit hit

“Let me express my support and empathy for the difficulties and challenges they face and my confidence that life will return to normal in China and beyond.”

What Danone said

Faber added: “2019 has been a year of strong progress for Danone both in terms of the delivery and the transformation of our company. 

“The sequential acceleration of our business quarter after quarter is evidence that we are in the right direction on sustainable profitable growth, while navigating multiple headwinds.”

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