International dairy company Danone has reported marginal sales growth of 0.4% in the first six months of the year.
In the second quarter of the year, consolidated sales stood at €6,664 million, up 0.2% on a like-for-like basis, reflecting a 2.1% decline in volume and a 2.3% rise in value.
“2017 is a pivotal year for the execution of our transformation agenda," said company CEO Emmanuel Faber. "H1 2017 has been a period of intense construction for Danone."
"As expected, the slow start of the year is the result of specific emerging markets’ headwinds and challenges in Europe and in North America, balanced with significant successes in developing sustainable platforms in specialised nutrition in China, and growing young and local dairy brands in Europe."
Performance
Danone's dairy and plant-based operations reported a drop in sales of 1.8% in the second quarter of 2017, as a result of a 4.8% decline in volume and 3% rise in value.
In Europe, Danone made investments in its Activia brand, with changes to packaging and local communication campaigns. It notes that local yoghurt brands such as Les deux caches in France, Light & Free in the UK, Danio in Poland and Benelux, and Oikas in Italy saw continued growth.
In Latin America, performance suffered from low consumer demand in Brazil, while Mexico experienced solid growth. Danone reported a 2.9% decrease in sales in North America during this period, following a decline in both volume and value.
The newly acquired plant-based brand Alpro delivered double-digit growth in the second quarter, with strong sales in the UK, Germany and Benelux. Similarly, sales of specialised nutrition products also increased in this period, experiencing 5.5% growth.
2017 Outlook
Danone anticipates that economic conditions for the rest of the year will remain uncertain overall, with an increase in the cost of strategic raw materials, and a steep rise in milk prices. The company priorities for the rest of the year include improving margins, strengthening its growth model, and promoting strategic opportunities.
"The very strong improvement in margin and EPS growth this semester again bodes well for our ability to reach our objectives for the year, with expected growth acceleration in the course of the second half," said Faber.
Danone's target is to deliver a double-digit recurring EPS growth at constant exchange rate for 2017.
© 2017 European Supermarket Magazine – your source for the latest retail news. Article by Sarah Harford. Click subscribe to sign up to ESM: The European Supermarket Magazine.
