French food giant Danone has reported that like for like net sales growth in its fiscal 2001 was up 5.1%, while there was a solid increase in operating margin from 10.8% to 11.1%, in line with the group’s targets.
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Due to the positive dynamic of the operating result, net profit (excluding exceptional one-time items) grew 8.3% to €780m in 2001. Exceptional one-time items, in line with Danone’s initial announcements, include €236m (before tax) for the Biscuits restructuring and €475m for an impairment to the Galbani’s goodwill linked with the divestment projects contemplated.
At a meeting on 18 February, the board of directors approved the audited consolidated accounts for 2001:
Key Figures
(€ millions) 2000 2001 Growth
Net Sales 14,287 14,470 [1] +5.1%
Operating Result 1,550 1,609 [1] +9.8%
Operating Margin 10.8% 11.1% [1] +48bp
Net Result (exc. exceptional one-time items) 720 780 +8.3%
EPS (f. diluted) (exc. exceptional one-time items) 5.09€ 5.51€ +8.3%
Exceptional one-time items (after tax) 1 [2] (648)
Net result 721 132
Net debt 4,401 4,827
Gearing ratio 55% 72%
[1]: like for like: at constant scope of consolidation and exchange rates
[2]: Including Biscuits restructuring provisions and exceptional impairment of Galbani’s goodwill
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By GlobalDataDanone commented that the performance was welcomed given the challenging environment caused by the strikes that followed the announcement of the biscuit restructuring plan in France; very difficult economics conditions in Argentina; and unfavorable price evolutions for some key group’s raw materials. Increases in milk and PET prices led to a 50 basis points operating margin impact partially offset by higher pricing.
In the second half, net EPS was up 10.4%, in line with the group’s target, and net earning per share (exc. Exc. exceptional one-time items) grew 10.4%, beating the Group 10% target. For the full year, net earning per share (exc. exceptional one-time items) grew 8.3% after goodwill amortization and 10.1% before goodwill amortization.
Danone said that its financial structure remained strong during 2001 with a 72% gearing ratio and the ability to cash in roughly €2bn from the finalization of the European Beer business divestment. Free cash flow grew by more than 30%, thanks to the first results of measures taken by the group to accelerate the growth of this key indicator in the measurement of its performance. Capital expenditures decreased by 7.6% and went down from 5.6% of net sales in 2000 to 5.1% in 2000.
The Board will ask the AGM of shareholders, to be held on 25 April, to approve a dividend of €2.06 per share for 2001, a rise of 8.4% compared to the amount paid last year.
For 2002, Groupe Danone confirms its targets: like for like sales growth of at least 5%, operating margin growing at least 20 basis points and an EPS growth of 10%. Net Sales for the Q1 2002 to be released on 23 April 2002.
