Upbeat Danone sees continued volume pressure

Upbeat Danone sees continued volume pressure

Danone has seen its share price dip this morning (16 April) after reporting first-quarter organic sales that narrowly missed consensus expectations.

The company revealed a 2.2% increase in organic sales in the first three months of the fiscal, climbing to EUR5.34bn (US$7.39bn). Consensus expectations had been for a 2.3% increase. The adverse impact of currency exchange meant reported sales fell 5.2%.

Danone said that the performance was "in line" with its "roadmap" and stressed that it has now "stabilised" its European business, which had suffered in fiscal 2013.

However, analysts pointed to volume declines in fresh dairy and early life nutrition, which resulted in lower volumes across Danone's regions, as cause for concern.

"Although the headline organic growth was broadly in-line with consensus expectations, volume performance was much more disappointing," Sanford C. Bernstein analyst Andrew Wood wrote in a note to investors.

"Negative volume growth in both fresh dairy and early life nutrition, as well as in every region, was a negative surprise. We had expected the weakest volume growth for over a decade...but this was much worse. Consequently, "in-line" results should disappoint."

Danone shares slid 1.35% to EUR52.55 at 11am in Paris this morning.

Click here to view the release issued by Danone today.