• H1 net income misses analyst estimates
  • Growth in fresh dairy sales slows

Danone has seen its share price slide this morning (28 July) as the French company's net income missed analyst forecasts and growth in its fresh dairy sales slowed.

Shares in Danone slid by 2% on the Paris Stock Exchange this morning (28 July), despite a 2.7% increase in net income to EUR861m (US$1.33bn) for the six months to the end of June. Operating profit was up 10.2% at EUR1.39bn.

However, MF Global analyst Andy Smith noted that Danone's net income had missed analyst consensus by around 3.5%.

Danone's underlying net income, which it said excluding one-off items, not "inherent" to the group's performance, increased 2.6% to EUR870m.

Net sales reached EUR8.36bn, an 8.7% increase on the year and Danone, which makes brands include Activia and Actimel, said like-for-like sales of fresh dairy products rose by 6% during the first half of 2011.

Nevertheless, second-quarter like-for-like fresh dairy sales grew more slowly, by 5.5%, which Smith said was likely to have been due to Danone's Unimilk business in Russia.

"Volumes were a very poor -0.2% in the second quarter, mainly due to a sharp sequential slowdown in Russia to +6% versus 15% in the first quarter," Smith said. "We think that the market will be disappointed by the sharp sequential slowdown in fresh dairy sales.

For the full year, the company has targeted like-for-like sales growth of between 6% to 8%. In terms of margins or profits, Danone stated that it aims to see trading operating margin rise 0.2% on a like-for-like basis. In the first half of 2011, it was down 0.23%.

Click here to view the earnings release.