Danone on course for 2007 ambitions

By Neil Merrett

- Last updated on GMT

Related tags Cent United states Eastern europe Latin america

Decline within Group Danone's Asian operations failed to dampen a
strong first quarter performance for the company as like-for-like
sales underwent a 10.1 per cent rise to €3.6bn.

Aided by strong sales in its dairy segment, as well as in the emerging markets of Eastern Europe and Latin America, the company was able to offset the negative effects of exchange rates and consolidation charges.

The results highlight the growing trend amongst companies to diversify their operations into new markets and products to offset sales declines within their regional operations and products.

Fresh dairy products continued to lead the group's business lines up by about 12 per cent to €2.1bn.

This was attributed to top line growth within the emerging markets of both Eastern Europe and Latin America being by about 20 per cent in each region.

Its beverage segment also enjoyed strong growth during the period, up 9.1 per cent to €1bn, helped largely by European markets like Spain and Germany.

In China, through the group's troubled Wahaha joint venture, the group also posted strong single digit growth, continuing significant income from the venture during the last quarter 2006.

Net sales of its biscuit and cereal products declined by some €91m, double digit growth and a return to profit in France still drove a like-for-like increase in the segment of 4.3 per cent.

Though, like-for-like sales growth was down by just over a percentage point from the 11.5 per cent increase it saw during the same period in 2006, the group's was still encouraged by the strong performance.

Top line growth for both its European and rest of the world operations rose nominally to 8 per cent and 17.2 per cent respectively.

However, Asia's performance proved some what less dynamic last year with growth down to 8.4 per cent from 20.6 per cent in 2006.

If it is able to maintain its overall global performance for the quarter Danone will remain on track to achieve its ambitions of 6 per cent - 8 per cent total like-for-like sales growth.

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