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Danone’s business thrives on baby food
FoodBev Media

FoodBev Media

14 April 2008

Danone’s business thrives on baby food

*Consolidated sales by Groupe Danone of France jumped almost 19% to €3.76 billion in the first quarter of 2008, boosted by the acquisition of Dutch baby food manufacturer Royal Numico. On a like-for-like basis, excluding acquisitions and currency effects, Danone’s sales rose 11.4% – driven by a 3% increase in volume and an 8.4% increase in value. *

“The first quarter witnessed a very solid financial performance across all our divisions,” noted Chairman and CEO Franck Riboud. “We are specifically pleased with the developments in our two new divisions, Baby Nutrition and Medical Nutrition, as their particular strong performances illustrate the quality and the speed of the integration process since the completion of the Numico acquisition.

“Based on the group's overall performance in the first three months of the year, we are confident to achieve our targets for 2008 both in terms of growth as well as profitability.”

Sales by Danone’s core dairy business were 10.5% up on a like-for-like basis to €2 billion, driven by 15% growth in Activia yogurt and other “blockbuster brands.” Growth slowed in France and Spain, following strong gains in the first quarter of 2007. Growth in the rest of Europe was “solid,” led by a leap of more than 30% in Russia.

Water sales up 7%

“Latin America continued its growth path in the mid-teens,” said the company. “North America accelerated its growth into the high-teens, on the back of very strong performance of Activia and the introduction of Danactive (Actimel) in 2007.”

Sales by Danone Waters rose 7% to €1 billion, based on 6.8% volume growth and a modest 0.2% increase in pricing. Latin American revenue was 19% up overall, led by Mexico and Argentina. Asian growth of 10% was driven by Indonesia and China, where Danone’s spring water brands performed particularly well.

European water sales grew just 1% – hit by softer market conditions in France, and the earlier timing of Easter, which meant there were fewer selling days during the quarter.

Danone reaffirmed its 2008 targets of 8-10% growth in sales, an improvement in operating (EBIT) margin of at least 30 basis points, and underlying growth in earnings per share of at least 15%.

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