French dairy giant Danone has recorded a higher-than-expected rise in first half operating profit but sales growth slowed down in the second quarter.
The firm, the world’s largest producer of yogurt with brands including Actimel and Activia, recorded first-half operating profit of EUR1.72bn (US$2bn), a like-for-like rise of 7.3%.
First-half sales amounted to EUR12.12bn, up 0.4% on a like-for-like basis.
Danone said it was helped by cost control and synergies from its acquisition of US organic food producer WhiteWave and momentum in its waters division.
The company, which also produces infant formula, said it has had success in developing sustainable platforms in specialised nutrition in China.
Sales growth slowed down in the second quarter, amid challenging conditions for its dairy business in Europe and in North America and headwinds in emerging markets, the firm said. Sales were EUR6.66bn, up 0.2% on a like-for-like basis and below analyst expectations. Growth in the first quarter was 0.7%.
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But Danone said it is confident of reaching its full-year 2017 targets.
CEO Emmanuel Faber said: “H1 2017 has been a period of intense construction for Danone, with the creation of the processes of decoupling of our growth and efficiency agendas, the creation of our regional grid, the launch of our EUR1bn savings Protein program and the integration of WhiteWave in Q2.
“As expected, the slow start of the year is the result of specific emerging markets’ headwinds and challenges in Europe and in North America, balanced with significant successes in developing sustainable platforms in Specialised Nutrition in China, growing young and local Dairy brands in Europe and executing the Dannon Pledge in the United States.
“Momentum was strong also in our medical nutrition and waters platforms and in former WhiteWave brands such as Alpro, Vega, and International Delight.
“The very strong improvement in margin and EPS growth this semester again bodes well for our ability to reach our objectives for the year, with expected growth acceleration in the course of the second half. I am pleased with the structural progress we have made during H1, in securing short-term delivery while preparing for growth acceleration and long term transformation.”