Danone booked an increase in full-year profits today (11 February) but the French food giant said it will continue to face a “challenging” financial and economic environment in 2010.
For the 12-month period, underlying net income reached EUR1.14bn (US$1.57bn), a 7.5% increase on 2008.
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Sales, however, dropped 1.6% to EUR14.98bn. Excluding the impact of currency exchange, total sales increased by 3.2% on a like-for-like basis. This was driven by a 5.2% rise in volume and a 2% decline in price/mix.
“Danone assumes it will continue to face a challenging financial, economic and social environment in 2010, with continued difficult consumption trends in western economies, weak emerging currencies, and inflation of raw materials,” Danone said.
“In this context, we will continue to focus on the development of our categories, the strengthening of our competitive positions and on the development of our brands. The growth of our free cash flow will continue to be one of our key priorities, and we will use productivity gains as well as selective and competitive pricing to manage cost inflation.”
Sales in the firm’s dairy division dropped to EUR8.55bn from EUR8.69bn in the previous year. Volumes for the year however, increased 4.6%.
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By GlobalDataIn Asia like-for-like sales were up 11%, in the rest of the world they were up 8% but in Europe, like-for-like sales dropped 0.3%.
Based on medium-term objectives announced in November, Danone said it expects a like-for-like sales growth of “at least” 5% and an increase of the free cash flow from operations of at least 10% on a reported basis.
In addition, Danone targets a stable trading operating (EBIT) margin versus 2009 on a like-for-like basis.
“While facing an environment which, we believe, will remain challenging in 2010 in many respects, Danone is emerging stronger from these two years, and ready to grab the many opportunities that exist in our categories,” said Franck Riboud, Danone chairman and CEO.
Click here for the full results and check back later for further insight into the company’s full-year results.
