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Danone First-Quarter Sales Top Estimates On Yoghurt Pricing

Published on Apr 19 2016 9:53 AM in A-Brands tagged: Trending Posts / Dairy / Danone

Danone First-Quarter Sales Top Estimates On Yoghurt Pricing

Danone reported first-quarter revenue growth that topped analyst estimates, as higher prices for its yoghurt products compensated for lower volume.

Like-for-like revenue climbed 3.5 per cent, the company said Tuesday. Analysts had expected 3.2 per cent, according to a Bloomberg survey. Fresh dairy sales increased 2.3 per cent in the quarter, helped by a 4.4 percentage point uptick in pricing.

Chief Executive Officer Emmanuel Faber is relaunching Activia yogurt and Actimel fermented milk products to boost sales amid sluggish consumption in western Europe. He has promised revenue growth at the fresh dairy unit to 3 percent to 5 percent by 2020. The stock rose 0.3 per cent to €62.52 as of 9:04 am in Paris.

"The market will focus on the bit better-than-expected organic sales growth in dairy," said Jon Cox, an analyst at Kepler Cheuvreux in Zurich. "Danone saying organic sales growth is improving in Europe is a positive, and the relaunches are expected to give them a fill-up."

Still, dairy volumes are declining. Shipments dropped 2.1 per cent in the first quarter, compared with a 0.6 per cent decline in the fourth quarter of 2015 and a 4.8 per cent drop in the year-earlier period.

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"Danone expects European dairy to get toward flat by the end of the year in organic sales growth terms," said Robert Waldschmidt, an analyst at Liberum Capital in London. "This means volumes will likely remain negative in Europe this year, albeit much improved."

Danone reiterated its forecast for sales growth of 3 per cent to 5 per cent on a like-for-like basis this year after a 4.4 per cent increase in 2015, the smallest in six years. The company also predicted improvement of its trading operating margin.

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