French dairy group Danone cut its medium-term sales growth guidance yesterday (18 November) but said it would increase free cash flow to EUR2bn (US$2.9bn) by 2012.

The company said it sees medium-term like-for-like annual sales growth of at least 5%, compared to a previous forecast of 8-10%.

"We will therefore continue to focus on delivering above category top-line growth which will be predominantly driven by volume growth," Emmanuel Faber, co-COO said. "The constituents of our top-line growth as well as our continued focus on cost competitiveness will remain the key drivers of our value creation.  In addition, the last twelve to eighteen months have reinforced the competitive importance of generating cash."

Following an investor seminar in Amsterdam, the company also reconfirmed its 2009 objectives. Like-for-like sales growth is expected to be close to 4% in the second half of 2009, with a like-for-like improvement of the trading operating (EBIT) margin of between 60 and 70 basis points for the full-year.

Danone also reconfirmed its expectation of 10% growth in underlying fully-diluted earnings per share for the full-year and double-digit growth of the free cash flow from operations.

"The world at large has gone, and is still going through, a profound transformational phase which will have a long-lasting impact on society and on consumer behaviour in specific," Faber said. "Our market share gains in 2009 are an evidence of the continued unparalleled ability of our brands to create value for our consumers, once adapted to the new macro-economic conditions."

He added: "We are convinced that the strength and uniqueness of our business models and our leading market positions will enable us to succeed in this mission and to deliver a strong and sustainable long-term performance."

Danone also confirmed yesterday that it is to axe 78 posts at its Blédina brand baby food plant at Brive-la-Gaillarde, Corrèze.

The plant, which employs a total of 550 staff, benefited from a EUR20m (US$29.9m) investment package earlier this year, which focused on a new production line for the Blédichef ready meals range.