Yoghurt company Danone has reported a 2.9% growth in like-for-like sales for 2016 – an increase of €21.9 billion.
Reported sales declined 2.1%, due to currency fluctuations in countries like Argentina and Russia, and the effects of consolidation.
Fresh dairy products grew by 2% in like-for-like sales, although its volume growth fell by 2.6%. This was aggravated by Activia's performance and difficult market conditions in Spain. Sales for Activia have not recovered since its relaunch, the company said.
Danone's water segment saw 2.9% growth in sales and volume, but its medical-nutrition unit saw the largest growth, seeing sales increase by 7.4%, with a volume growth of 4.8%.
This was encouraged by 'solid gains' in the UK and the Benelux region, as well as increased expansion in China and Brazil.
Geographically, Danone's European division saw a hit (largely due to dairy products), with sales growth declining by 1.4% and volume growth by 1.8%.
Its sales in the Russian commonwealth and North America hit 4.6% growth, but fell more than 2% in volume growth.
Its sales growth in Latin America, Asia Pacific, the Middle East and Africa was 6.7%. Volume growth increased by 2.7%, affected by inflation and low consumer spending in countries like Brazil.
'Alimentation-Revolution Journey'
CEO Emmanuel Faber commented on the 2016 results, saying, “With the upcoming addition of WhiteWave, we will soon start a whole new and exciting chapter of our alimentation-revolution journey.
"While we delivered a robust performance, leading to a very strong recurring EPS growth in 2016, the challenges we faced, including a slower turnaround of dairy in Europe and major market volatility, are a clear case to step up in our ability to seize consumer opportunities and improve our efficiency."
To this end, Danone announced a comprehensive efficiency programme called 'Protein', designed to deliver €1 billion in savings by 2020.
The programme 'consists in creating the best conditions to spend better, buy better, and work more efficiently in a sustainable manner', with savings reinvested in growth projects.
In addition, Danone will undergo an organisational revamp, including the creation of a more effective regional business team and a 'tighter' executive committee team.
A strategic business unit for North America will also be created after the acquisition of WhiteWave in the US.
As for 2017, Danone expects its raw-material costs to experience single-digit growth, with rising costs of milk, plastic and fruit. It aims to deliver recurring EPS like-for-like growth of more than 5%.
© 2017 European Supermarket Magazine – your source for the latest retail news. Article by Karen Henderson. Click subscribe to sign up to ESM: The European Supermarket Magazine.
