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July 25, 2014

FRANCE: Danone H1 profits down but sticks to FY goals

Danone today (25 July) reported a drop in half-year profits, hurt by weak dairy and baby food volumes, but the French group maintained its full-year targets.

By Dean Best

Danone today (25 July) reported a drop in half-year profits, hurt by weak dairy and baby food volumes, but the French group maintained its full-year targets.

Trading operating income, a company figure that excludes one-off items, was down 10% at EUR1.48bn (US$1.99bn) for the six months to the end of June.

Underlying net income dropped 11.5% to EUR683m. Consolidated net income was down 37.4% at EUR608m.

First-half sales were down 5.3% at EUR10.47bn but increased 2.2% on a like-for-like basis.

Price increases helped increase revenue from Danone’s dairy division but sales volumes fell in the first half, as did margins.

The price hikes hurt dairy volumes in the CIS region, while Danone said its sales slowed in the US. Sales in Europe “continued to decline”, it revealed.

Sales revenue, volumes and margins from Danone’s baby food arm fell. Danone said it was still feeling the effect of last year’s botulism false alarm at supplier Fonterra, which prompted the French to recall products.

Nonetheless, Danone maintained the targets for annual sales and margins it issued in February.

Shares in Danone were down 0.3% at EUR55.81 at 10:39 CET.

Click here for just-food’s ‘On the money’ coverage of Danone’s conference call with analysts.

Click here for the full statement from Danone.

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