Danone set to build on profits growth

By Anthony Fletcher

- Last updated on GMT

Related tags: Danone, Groupe danone

Groupe Danone presented what it described as a "solid track record
of profitable growth" at this week's annual investors seminar in
New York.

Focusing the discussion on the health positioning of its portfolio and the prospects of its dairy division, the French firm was keen to emphasise its development potential.

"Groupe Danone has revised its mid-term like-for-like sales growth objective from +5 per cent to +7 per cent to a range of +6 per cent to +8 per cent annually,"​ said the firm in a statement.

"The management is also confident that it can grow its like-for-like trading operating income faster than sales and between +7 per cent and +10 per cent annually. For 2007 the like-for-like trading operating margin improvement should be in excess of +20 basis points."

Such a strong financial position is likely to be used as leverage to fund further growth. In August, FoodNavigator reported that Danone had built up a war chest of up to €1bn to spend on acquisitions over the next three to five years.

Antoine D'Estaing, Danone's chief financial office, told the Wall Street Journal at the time that the group was looking for small to medium businesses in new, emerging markets. More acquisitions in emerging markets could help Danone to fight back against Nestle Waters, which this year overtook Danone to become the world's biggest bottled water firm.

But Danone looks to be on track. The group, which owns top brands such as Evian bottled water, Activia yoghurt and Lu biscuits, announced earlier a nine per cent like-for-like sales rise for the first half of 2006.

Success was largely driven by high double-digit growth across emerging markets in Asia, Eastern Europe and Latin America, and was spurred on by new product launches in the health and functional food categories. It is perhaps in these markets that Danone will be looking to expand.

Related topics: Dairy-based ingredients

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