French food giant Danone said it will look at entering into new markets in 2010, with particular emphasis on eastern Russia and new regions within China.
Speaking at the firm’s earnings conference this morning (11 February), Franck Riboud, Danone chairman and CEO, said the company would like to “open” new countries with the help of acquisitions.
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“Last year we opened I think two or three countries, we will continue to do that,” Riboud told analysts.
“The question is, how are we going to open the countries starting from scratch? We did it in Egypt, we bought a very very small company, not because of the company itself but because it helped us to grow faster. You get the energy, you get the facilities, you get the trucks, you get the warehouse. In some countries you get there much faster by buying some company, even if it is a very small one.”
Riboud said he was unable to be more specific on particular companies until Danone has a “target” but said the firm will continue to strengthen its geographies in Russia and China by “seizing new opportunities”.
“More and more we are going to see how we can open new countries, by launching new products, products existing in some countries but not in others. For me, to go into the eastern part of Russia is a new country for me, even if we are in already strong in Russia.”
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By GlobalDataHe added: “To be very strong in another part of China is a new country for me and we are ready to build a structure, though new business units. We have a business unit dairy in Shanghai. We are ready to build this in another region. So that’s a new vision for us.”
Danone this morning booked an increase in full-year profits but 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.
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.
Riboud told analysts he was “confident” that, if Danone continues along its current path, 2010 will be a good year for the company.
“With huge pressure I’m not saying it is going to be easy, I think we controlled 2009 better than we expected. But I am confident on 2010,” he said.
