Danone trims its targets on tough Europe
FRENCH food group Danone trimmed its sales growth and margin targets for 2012, saying tough western European markets would hold back strong growth in emerging markets, which now account for more than half of sales.
The world’s largest yoghurt maker, with brands like Actimel and Activia, said yesterday it expected like-for-like sales to rise five to seven per cent in 2012 and margins to be stable.
The group delivered a 7.8 per cent rise in underlying sales in 2011, having targeted six to eight per cent growth, and a 20 basis point improvement in operating margin, in line with its goal.
Danone is the most exposed among big food groups to the Eurozone debt crisis with around 40 per cent of sales in the region and it is particularly exposed to southern Europe where the economic outlook is very challenging.
Danone, whose global brands also include Evian and Volvic waters, posted a 9.2 per cent rise in 2011 operating profit to €2.84bn.
Underlying sales rose 7.8 per cent, slightly above forecasts of 7.2 per cent growth. Fourth-quarter growth of 7.8 per cent was largely driven by strong demand from the waters, baby nutrition and medical nutrition markets, particularly in Asia.
The operating margin rose to 14.72 per cent of sales, mostly due to a gradual improvement in the margin of the newly-acquired Unimilk business in Russia.
Danone said it would continue to use productivity gains and pricing to counter rising raw material costs.
Finance chief Pierre-Andre Terisse, who said emerging markets were Danone’s “growth engine”, declined to comment on reports Danone and Swiss food rival Nestle have emerged as front runners in an auction to buy Pfizer’s $10bn Wyeth infant nutrition business.