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Danone First-Half Earnings Top Estimates On Price Increases

Danone, the world’s largest yogurt maker, reported first-half earnings that beat analyst estimates as a revamp of its Actimel and Danonino brands and price increases offset lower-than-expected volume.

Adjusted operating income rose 7 percent to 1.48 billion euros ($1.6 billion), the Paris-based company said in a statement Thursday. Analysts expected 1.4 billion euros. Like-for-like sales advanced 4.1 percent in the second quarter, exceeding the consensus for 3.7 percent growth. Volume gained 1 percent, missing the 1.3 percent consensus.

Danone has tweaked some of its dairy products to counter years of sluggish consumption in western Europe, helping fuel a 5.2 percent increase in pricing in the quarter. The maker of Evian bottled water agreed to buy WhiteWave Foods Co. for $10 billion earlier this month, a move that could double the size of the company’s U.S. business and make it the global leader in organic food and drinks.

Dairy like-for-like sales rose 3 percent in the second quarter, exceeding the median 2.7 percent analyst estimate, amid improvement in Europe and North America. Actimel’s relaunch included a new digital campaign called “Stay Strong,” adapting its slogan as European regulators years ago prohibited marketing the probiotic product as an immunity defense. The brand also changed packaging and added new flavors.

Danone reiterated its forecast for sales growth of 3 percent to 5 percent on a like-for-like basis this year. The company also kept its prediction that its adjusted operating margin should widen by 50 to 60 basis points this year.

News by Bloomberg, edited by ESM. To subscribe to ESM: The European Supermarket Magazine, click here.

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