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Food Group Danone Keeps Goals Despite Modest Rise In Q1 Sales

Published on Apr 17 2019 9:19 AM in A-Brands tagged: Trending Posts / China / Danone / Infant Formula

Food Group Danone Keeps Goals Despite Modest Rise In Q1 Sales

French food group Danone kept its forecasts for a further rise in sales and profits this year although weaker demand for infant formula products in China and a consumer boycott in Morocco weighed on first-quarter sales.

Danone, the world's largest yoghurt maker, said first-quarter underlying sales had risen by a relatively modest 0.8% to €6.138 billion, marking a slowdown from 2.4% growth in the fourth quarter of 2018.

The company nevertheless expected sales growth to accelerate in the second half of the year.

Picking Up Momentum

"The first quarter showed a start of the year in line with expectations...We are pleased with the momentum of the business which will become increasingly visible from the second quarter. This gives us every confidence that we will meet our full year guidance," CEO Emmanuel Faber said in a statement.

Danone reiterated it was targeting group like-for-like sales growth of around 3% and an operating margin above 15% for 2019.

Danone added it was on track to deliver on its 2020 goals for an operating margin above 16% of its sales and like-for-like sales growth of 4-5%.

Danone's waters division and it's dairy business put in solid performances over the quarter, but sales of Danone's Early Life Nutrition products in China fell around 15% in the quarter, partly due to a lower birth rate in China.

This compared with a 10% decline in the fourth quarter of 2018 and a 20% decline in the third quarter, in that division.

China is an important source of growth for Danone, contributing about 30% of sales of the Early Life Nutrition business, which makes infant formula and general baby food products.

Danone said it still expected the business in China to return to growth in the second half of 2019.

Danone also said its sale of Earthbound Farm, announced last week, would improve its recurring operating margins in 2019.

News by Reuters, edited by Checkout. Click subscribe to sign up for the Checkout print edition.

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