French food group Danone has announced that it is launching a review of its assets and is reshaping its management to cope better with challenges caused by the coronavirus crisis.
The world's largest yoghurt maker, which is putting about €500 million worth of assets up for sale, said it aimed to "rapidly reconnect" with its goal to deliver mid-term like-for-like sales growth of 3% to 5%.
The group said it was immediately looking at strategic options for its Argentina business and North American Vega plant-based brand, and would at a later stage conduct a more in depth review of its portfolio to prune underperforming assets.
Danone posted a 2.5% drop in like-for-like third quarter sales, slightly worse than the 2.2% fall analysts expected, as a fall in out-of-home consumption due to the pandemic continued to hit sales of its bottled waters division and travel restrictions in Asia weighed on its specialised nutrition sales in China.
The consumer giant, owner of Evian and Badoit water and the Activia and actimel yoghurt brands, which is shifting to a management more focused on geography than on products, also reinstated its forecasts for 2020, targeting a 14% recurring operating margin and €1.8 billion of free cash flow.
Chairman and Chief Executive Emmanuel Faber has had a strategy centered on diversifying the group's portfolio into fast-growing products featuring probiotics, protein and plant-based ingredients to mitigate slower growth in dairy.
In 2017, Danone bought U.S. organic food producer WhiteWave in a $12.5 billion deal, bringing the company more into line with healthier eating trends.
But disruption caused by the coronavirus pandemic has dealt a blow to Faber's turnaround efforts and in April Danone withdrew its financial guidance for 2020.
Share Price Decline
Danone shares have lost 25.30% so far this year, lagging a 2% gain for rival Nestle and a 19% fall in the CAC-40 index of French blue chips.
As part of its top management shake-up, Danone announced on Monday that Chief Financial Officer Cecile Cabanis would leave the company in February to be replaced by Juergen Esser, who is now CFO of the Waters and Africa divisions.
Danone also appointed two regional CEOs: Shane Grant for North America and Veronique Penchienati-Bosetta for Europe and the rest of the world. Former Executive Vice President Waters and Africa Henri Bruxelles will become chief operating officer.
News by Reuters, edited by Donna Ahern, Checkout.