Danone results get Asia baby food boost

By Caroline SCOTT-THOMAS contact

- Last updated on GMT

Related tags: Yoghurt, Europe, Milk

Asian demand for baby food was a major driver of Danone's sales increase
Asian demand for baby food was a major driver of Danone's sales increase
Danone reported sales growth in the first quarter of 2013 as demand for baby food in Asia boosted profits, despite continued weakness in Europe.

Like-for-like sales grew 5.6% during the quarter to reach €5.34bn, also driven by strong demand for bottled water and medical nutrition – but there were big differences in performance between regions. Sales grew by more than 10% in emerging markets and North America combined, driven by ‘exceptionally strong growth’ in baby nutrition, while sales in Europe fell 5.1% compared to the prior year period.

"As we expected, the first quarter of 2013 saw a solid performance that highlighted once again the contrast between robust growth in emerging markets and the sluggish economy in Europe,”​ Danone chairman and CEO Franck Riboud said in a statement.

“…In Asia growth reached record highs, particularly in Baby Nutrition.”

Global like-for-like sales in the Baby Nutrition division grew 17.1% during the quarter, compared to a year earlier.

Riboud added that the emerging middle class in Latin America and Africa had contributed to a steady increase in sales, while European consumer spending remained ‘lacklustre’, particularly in fresh dairy products. In North America, the Greek yoghurt sector was the main driver of increased fresh dairy product sales, and the company said it planned to add further capacity in that region to meet demand.

“Results to date are in line with our roadmap and reflect progress in building a profitable growth model. On this basis, we stand by our full-year targets for 2013.”

European cost cutting

In February, the company announced a plan to cut 900 jobs across 26 European countries – including halving its European management units – in an effort to deal with a difficult year, which saw fresh dairy product consumption plummet in Spain and other southern European countries.

Danone said that it hoped to save €200m over a two-year period through a range of cost cutting strategies.

“The cost reduction and organizational adaptation plan we presented in February is moving ahead on schedule, and consultations with employee representatives are now under way. Initial results of all these measures are expected in the second half of the year,” ​Riboud said.

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