FRANCE: Danone rounds off challenging 2012 with dairy boost

By Dean Best | 19 February 2013

  • Fresh dairy volumes up in Q4
  • First increase for seven quarters
  • Q4 LFL sales beat expectations 
North America, Russia offset continued problems for Danone dairy in Europe

North America, Russia offset continued problems for Danone dairy in Europe

The first increase in dairy sales volumes for nearly two years in the fourth quarter of 2012 has helped Danone round off a challenging year on a positive note.

Danone, which was forced to issue a profit warning in June amid poor sales in Europe, today (19 February) reported a 0.4% rise in fresh dairy volumes on a like-for-like basis for the last three months of the year.

For 2012 as a whole, Danone booked a 5.4% increase in sales to EUR20.87bn. Trading operating income was up 1.8% at EUR2.96bn, with net income 0.9% higher at EUR1.82bn.

However, Danone's trading operating margin fell 50 basis points in 2012, the potential slide it warned about in June.

The increase in dairy volumes was the first Danone had posted from the division for seven quarters, according to Sanford Bernstein analyst Andrew Wood, and meant the unit joined the rest of the company in reporting higher volumes for the fourth quarter.

Danone's group fourth-quarter like-for-like sales were up 4.9% at EUR4.79bn, ahead of analyst forecasts. Like-for-like sales in Europe were still under pressure in the quarter, falling 0.9%.

However, Danone's shares were up 4.86% at EUR52.63 at 11:01 CET. "Although mixed, we would suggest the market will react most positively to the news on the top-line, and would suggest a good, positive stock reaction today," Wood said.

Alongside the results, Danone said plans to revamp its business in Europe could lead to 900 jobs being cut.

Click here for coverage of Danone's conference call with analysts, including comments from chairman and CEO Franck Riboud on why changes in Europe are neceessary.

Click here for a round-up of what analysts thought of Danone's 2012 results and outlook for 2013.

Sectors: Baby food, Dairy, Financials

Companies: Danone

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