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Danone Lowers Targets And Facing Bribery Investigation

Published on Oct 16 2013 9:44 AM in A-Brands

Danone Lowers Targets And Facing Bribery Investigation

French dairy producer Danone has lowered its full-year targets after reporting that the fallout from the recall of baby-milk products in Asia had a far greater impact than expected.

This is the second successive year that Danone have had to lower its full-year targets. In June 2012, the company reduced their targets owing to a declining demand for goods in southern Europe.

Shares in the group were down 4.3% in early trading this morning at €50.08.

The company, which makes Activia yoghurt, said that like-for-like sales in its hitherto fast-growing baby nutrition unit fell 8.6% in the third quarter after a recall sparked by what turned out to be a false alert.

The company described it as “a very steep decline”.

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It said the impact of the recall in several key Asian markets, including China, would reduce full-year sales growth to between 4.5% and 5%. The group had previously said that it expected full-year sales to grow “at least 5%”.

The maker of Evian bottled-water is claiming at least €200 million ($272 million) in compensation from Fonterra Cooperative Group Ltd. after a warning of tainted ingredients in some products supplied by the New Zealand-based company earlier this year.

Danone has also had to deal with bribery claims at its Dumex baby-milk business in China. The unit paid medical workers in the northern city of Tianjin to promote its infant formula, local government said on Oct. 14. An official investigation found that health-care staff had accepted payments from the French formula maker, prompting Dumex to take disciplinary measures and strengthen governance in China.

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