Danone focuses on healthy growth in 2008

France’s Group Danone raised its expectations of growth in 2008, after a year of change in 2007 as the company tightened its focus on healthy foods and beverages.

Danone completed the sale of its entire biscuits and cereal products division to Kraft Foods in the second half of 2007 and acquired Dutch baby food and clinical nutrition manufacturer Numico.

Although Danone’s long running dispute with its estranged Chinese partner Hangzhou Wahaha has still not been resolved, the group believes it is now in better shape to prosper in the future.

Chairman and CEO Franck Riboud said: “2007 was a year of strategic decisions that reinforce our leadership position in healthy food. It was also a year of remarkable profitable growth. Danone again reached its ambitious targets, thanks to the highest ever growth rate in the fresh dairy division and a very strong fourth quarter in the water division. The underlying strength of the business, coupled with the smooth integration of our Numico business, gives me particular confidence in the group’s ability to accelerate its growth profile even further. As a consequence, we are increasing our growth targets for 2008 and beyond.”

Danone is now aiming for like for like sales growth of 8-10%, with increased operating profit and growth in underlying earnings per share of at least 15%.

The company’s published IFRS results for 2007 included only six months’ sales from its joint venture with Wahaha, because of the dispute, plus €450 million in Numico sales over the last two months of the year. Consolidated revenue was reported as €12.77 billion, representing like for like growth of 9.7% against Danone’s 2007 target of 6-8% growth.

Earnings trebled to €4.18 billion, boosted by €3.1 billion from the sale of the biscuit and cereals business. Underlying earnings were €1.18 billion or €2.47 per share, compared with €1.19 billion or €2.44 per share in 2006.

Danone’s consolidated sales increased in all major geographical regions, with Europe up 7.4%, Asia up 4.7% and other markets up 17.4%.

The water division grew just 4% over the year, due to the impact of the Wahaha dispute and poor weather in West European markets in the third quarter. Danone’s water brands performed strongly in Latin America and Asian markets with the exception of China.