Dairy and water key to Danone profit growth

By Neil Merrett

- Last updated on GMT

Related tags: Danone, Groupe danone, Fiscal year

Group Danone posted a 7.2 per cent increase in sales during the
full 2007 fiscal year amounting to €14.5bn, on the back of a strong
performance in its dairy and bottled water businesses.

Operating profits also rose on this basis for the twelve-month period ending 31 December 2007, over the same period last year as it restructures into a nutrition-focused food and beverage manufacturer. Group chairman Frank Riboud claimed that 2007 would go down as a historic year for the group in meeting its ambitions to consolidate its position as a manufacturer of healthy products. He added that further growth is expected ahead in 2008. "Despite strong headwinds, Danone had again reached its ambitious targets thanks to the highest ever growth rate in the fresh dairy division and a very strong fourth quarter in the water division,"​ he stated. "The underlying strength of the business, coupled with the smooth integration of our Numico business, gives me particular confidence in the group's ability to accelerate its growth profile even further."​ Danone said that it now expected full year profitability over the course of 2008 to grow ahead of its expected sales increases of eight to ten per cent. The company added that growth reflected improved performances throughout its international operations. Through Danone's Rest of the World segment, sales were up by 17.4 per cent, while revenues from Europe and Asia rose by 7.4 per cent and 4.7 per cent respectively. Fresh Dairy​ In the company's fresh dairy operations, sales increased by 12.2 per cent, mainly from its four key brands Activia, Actimel, Taillefine/Vitalinéa and Petit Gervais/Danonino, the company said. Sales for these four brands alone rose by about 20 per cent over the year, according to Danone. The segment was further boosted by improvements in the number of branded goods, and price increases designed to offset higher milk costs. Danone's French sales increased by mid single digit figures, while the rest of Europe posted sales improvements in the teens, the company said. Bottled Water ​ Overall sales for Danone's water brands increased by four per cent, though this figure was not representative of the segment as a whole, the company said. The company said that the operations were impacted by exceptionally poor weather in Western Europe over the third financial quarter and further difficulties over its disputed Chinese joint venture with Wahaha. Despite these difficulties, Danone claims that in other international markets sales of its mineral and spring water brands benefited from demand for healthy and nutrition products. Sales of the group's bottled water brands, which include were particularly strong in the company's Latin America and Asian Markets - excluding china - according to Danone.

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