Danone keeps its growth outlook despite Morocco boycott
By Dominique Vidalon - Jul 31st 2018, 13:55
Danone is counting on baby food sales in China to help power annual earnings higher despite setbacks in Morocco and Brazil that slowed second-quarter sales, the French food group said.
"We are entering the second half with an operating model capable of offsetting these headwinds," CFO Cecile Cabanis said, referring to a boycott in Morocco and a trucking strike in Brazil.
Danone "will progress towards its 2020 ambition through further sales growth and an improved recurring operating margin", the group said in a statement.
Second-quarter like-for-like sales rose 3.3%, topping the 3.1% expected by analysts. This beat the 2.6% reported by rival Nestlé but marked a slowdown from 4.9% in the first quarter. Danone is targeting like-for-like sales growth of 4% to 5% by 2020 and an operating margin higher than 16%. It reported a margin of 14.27% for the first half.
Shares in the world’s largest yoghurt maker were up 1.9% in early trading. Brokerage Liberum described the results as "solid" and kept its "buy" rating on Danone. Operating profit rose 7.9% in the first half helped by cost controls and its takeover of US organic food maker WhiteWave last year.
Chinese demand for baby food and sales at its water division remained solid while its dairy business in North America returned to growth in the second quarter.
The boycott in Morocco was launched earlier this year on social media against what protesters say are unfair prices set by large companies. Danone, which makes 6% of its group sales in Morocco, said last month its local dairy unit Centrale Danone had lost more than 50% of its fresh milk market share due to the boycott.
Cabanis said in a statement that Danone was looking to regain consumer trust. "Sales continued to decline in Brazil where the truckers’ strike exacerbated already difficult market conditions."Reuters
Woolworths carves out market share in SA
27/11/2019 - 10:11
In Australia, David Jones's sales declined 2.1%, with the company saying a store refurbishment contributed to the decline.
Gearing FMCG manufacturing for the red season spike and maximising profits all year round
25/11/2019 - 11:03
As we enter the festive season, demand for Fast-Moving Consumer Goods (FMCG) increases rapidly, often leaving manufacturers scrambling to fulfill orders from their distribution channel. If demand cannot be met, then loss of revenue is inevitable. However, over-production is not an ideal solution either, as it can leave manufacturers sitting with unsold stock that costs money to store.
Macy's cuts forecast again after gloomy quarter
22/11/2019 - 14:04
Macy’s cut its annual profit forecast for the second time in 2019, as the department store operator blamed weak international tourism and sluggish mall traffic for the first drop in same-store sales in two years.
Sales at Truworths Africa outperform its UK business
12/11/2019 - 13:24
Truworths, which was forced to write down its UK business by a third recently, said that retail sales in that country were flat in the 18 weeks to November 4, although its African operations performed better.
Black Friday could cost careless shoppers dearly
12/11/2019 - 09:38
SA consumers risk paying a lot more than they bargained for if they are careless when shopping online this Black Friday, warns Fortinet.