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February 11, 2009

FRANCE: Danone sticks to targets after profits jump

Danone, the French food group, has maintained its earnings targets after posting a 15% rise in profits for 2008.

Danone, the French food group, has maintained its earnings targets after posting a 15% rise in profits for 2008.


The company, which makes brands including Activia yoghurts and Evian bottled water, said the economic downturn had hit consumption in most of its markets but insisted it expects consumption patterns to remain stable in 2009.


“The global economic environment has further deteriorated in the past three months, resulting in a slowdown in most markets in which the group operates, including in a number of emerging countries,” Danone said. “Our scenario for 2009 remains that current consumption patterns in our key emerging and developed markets will continue over the balance of the year, with no significant improvement or dramatic breakdown.”


Danone kept an earnings forecast issued in November. The company said it expects like-for-like sales to grow by “a few points below” its medium-term guidance of 8-10%.


Danone has also forecast a 10% rise in underlying fully diluted earnings per share on an organic basis and at constant exchange rates.


Chairman and CEO Franck Riboud said: “Our focus in each of our business lines will be simple: grow wherever the growth is, continue to perform above the category and strengthen our market shares.


“Danone will continue to build on, and consolidate, the specific factors from which we derive the unique quality of our results and the engagement of our staff: health positioning, support for the progress of people and their competencies as well as commitment to social and environmental responsibilities which are all competitive advantages for Danone.”


Looking at Danone’s 2008 results, rising baby food sales helped boost annual profits. Danone’s underlying net income rose 15% to EUR1.31bn (US$1.7bn). Turnover rose 8.4% on a like-for-like basis to EUR15.22bn. Trading operating income climbed 12.3% to EUR2.27bn.


During the fourth quarter of the year, sales growth slowed, climbing 6% on a like-for-like basis. Fresh dairy volumes dipped 0.3% but rose 3.8% in value terms.


Danone’s baby nutrition business benefited from an easy comparison on 2007 and gains in China. Sales jumped 20.8% and by 14.8% in volume terms.

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