Danone has reported that its like-for-like sales in the third quarter were up by 4.2%, and organic growth for the first nine months of the year was 5.5%.
The company said that it believed Europe had stabilised in terms of sales, which were down less than 1%, while sales were up almost 8% in the North America, CIS, Asia-Pacific, Latin America and Africa/Middle East regions.
However, the company noted that its business had been adversely affected by what it called a “false safety alert in Asia”. Danone specifically referred to the Fonterra alert that triggered the recall of selected infant formula products and said that it led to significant losses in sales, earnings and cash-flow. Action plans to restore sales are being deployed in affected markets and are generating results effectively but very gradually, the company said.
Fonterra had previously confirmed that it was in discussion with Danone concerning a resolution to the problems caused by the recall of whey protein concentrate in August, which subsequent tests indicated was unnecessary.
«Our Group’s third-quarter performance reflects fallout from the Fonterra affair in Asia, but also strong underlying dynamics in the rest of our operations,” said Danone chairman Franck Riboud. “In Fresh Dairy Products, we are building strong momentum: in North America, Dannon is consolidating its number one position with a very strong showing in Greek yogurt; Danone Russia confirms double-digit growth driven by its flagship brand Prostokvashino; and figures for Europe confirm that we are stabilizing our sales and market share.”
“Our Waters division turned in yet another remarkable performance, especially in emerging countries and in aquadrinks, buoyed this quarter by very good weather in Europe. Last but not least, we have continued to invest in our profitable growth drivers and to build new sources of growth.
“In the midst of these positive trends, we had to address the false alert issued by Fonterra in early August, triggering the recall of selected infant formula products in eight Asian markets. We are now able to measure fallout from that event clearly, including both the short-term financial impact and the resources and time required to recover our positions.”
“In the short term, this will weigh on our sales, our operating margin and our cash-flow, which has led us to adjust our full-year 2013 targets,” concluded Riboud. “Our priority is to get back on track for strong and sustainable growth in this region as early as possible in 2014.»
Source: Ingredients Network