Danone First-Half Profit Advances as Fresh Dairy Unit Recovers
Danone, the world’s biggest yogurt maker, reported an advance in first-half earnings and quarterly revenue that exceeded analysts’ estimates, as lower milk prices aided a recovery at its dairy business.
Adjusted operating profit rose 17 per cent to €1.38 billion, the Paris-based company said Friday. That compares with the €1.37 billion average of estimates in a Bloomberg survey. Second-quarter like-for-like sales rose 4.6 per cent, beating the 4.3 per cent estimate.
“In Europe, where margins rose significantly, we are executing an overhaul of our fresh dairy products business and finalizing the conditions necessary for a return to growth,” chief executive officer Emmanuel Faber said in the statement.
The maker of Activia yogurt has said it expects growth in its dairy business to accelerate in the second of half of 2015, with Europe progressively improving. Milk prices have dropped in the U.S. and Europe following years of increases that weighed the business down amid sluggish consumption.
Danone reiterated its forecast for a 2015 revenue increase of 4 per cent to 5 per cent on a like-for-like basis, combined with “slight growth” in the operating margin. Like-for-like sales are adjusted for acquisitions, disposals and currency fluctuations.
Fresh dairy accounts for more than half of Danone’s total sales, with western Europe making up roughly 29 per cent of that, according to Sanford C. Bernstein analyst Andrew Wood.
Bloomberg News, edited by ESM