Danone Forecasts Higher Profitability This Year On Cost Control
Danone forecast profitability will improve this year as it contains costs to adjust for difficult markets.
The trading operating margin should widen by 50 to 60 basis points in 2016, the French yogurt maker said in an unscheduled statement Tuesday. The company previously targeted “solid improvement.” Danone reiterated its forecast for sales growth of 3 percent to 5 percent on a like-for-like basis this year.
“Looks like a positive at first glance,” said Jon Cox, an analyst at Kepler Cheuvreux, by e-mail. He said the consensus was for an increase of 30 to 35 basis points.
Danone said it’s adjusting investments in markets such as China to maintain profitable growth, without elaborating. The sales forecast implies that revenue gains may slow with decelerating economies. Sales rose 4.4 percent in 2015, the weakest rate in six years.
“We’re pursuing our transformation plan in 2016 and are reinforcing our model through disciplined resource management,” Chief Financial Officer Cecile Cabanis said in the statement.
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