The world’s largest yoghurt maker however stuck to its full-year profit and sales outlook, despite saying it faced volatile markets notably in China, Brazil and Russia.
«With this very good first half, we are fully on track to deliver on our 2020 goals,» Chief Financial Officer Cecile Cabanis told journalists.
Emmanuel Faber, who took over as Danone CEO in October 2014, has vowed to return the French company to «strong profitable and sustainable growth» by 2020, reviewing its business in China and overhauling its dairy division where it has cut costs and launched new products.
Earlier this month Danone, which competes with Nestle (NESN.S) and Unilever (ULVR.L), announced what would be its largest acquisition in a decade with a deal to buy U.S. organic-food producer WhiteWave Foods for $10.4 billion.
The deal was «moving according to plan», Cabanis said.
First-half operating profit reached 1.478 billion euros ($1.64 billion), above a company-compiled average of analyst estimates for 1.427 billion euros. Operating margin rose to 13.37 percent of sales from 12.12 percent a year-ago.
«The margin progression illustrates the extent to which Emmanuel Faber is able to assert that the group is in line with the 2020 plan,» said Natixis analysts.
«It also gives the management credibility as regards the offer for WhiteWave, which we felt had come a little too soon relative to the timetable,»
By 0916 GMT, Danone shares gained 1.67 percent, topping a 0.15 percent gain in the CAC-40 index of French blue chips.
Second-quarter like-for-like sales rose 4.1 percent, beating analyst expectations for 3.7 percent growth, and reflecting robust demand for baby food in Asia and dairy in North America as well as stronger dairy demand in Europe where Danone said it aimed to stabilize sales in the second half.
In Europe, the relaunch of the Danonino and Actimel brands to help counter sluggish consumption is starting to pay off and the next step is to relaunch the Activia brand, Cabanis said.
Overall like-for-like sales of dairy, which make up the bulk of Danone’s business, rose 3 percent in the quarter, as a 5.2 percent rise in prices offset a 2.2 percent decline in volumes.
Baby food sales rose 7.2 percent like-for-like in the quarter, faster than the first quarter’s 4.8 percent growth, with sales in China driven by an increase in direct distribution through specialized stores and local e-commerce offerings.
In Europe, however, indirect demand from Chinese consumers buying baby formula online fell in the second quarter due to changes in the Chinese regulatory environment.
«Some traders are waiting to see how new regulations are put in place» Cabanis said.
Continued de-stocking of the Mizone drink in China weighed on the water division and floods in the country may affect Mizone’s performance in the third quarter, she said.
Danone reiterated 2016 full-year targets for its trading operating margin to rise by 50 to 60 basis points and like-for-like sales growth in a range of 3 percent to 5 percent.
Source: Reuters
Link: http://www.reuters.com/article/us-danone-results-idUSKCN1080EM
