FDBusiness.com

Danone has posted consolidated sales of €24.68 billion for 2017, up by 2.5% on a ‘like-for-like New Danone’ basis (reflecting the integration of the WhiteWave acquisition), including a 3.9% rise in value showing continued mix and value enhancement in all business sectors, which offset a 1.4% decline in volume. Full-year reported sales were up 12.5% against 2016, including the impact of the consolidation of the WhiteWave acquisition from April 2017 along with other changes resulting primarily from the disposal of Stonyfield in August 2017.

Danone reported a 17.2% increase in recurring operating to €3.54 billion for 2017. Recurring operating margin reached 14.36%, up 58 bps on a reported basis, which included the dilutive impact from the WhiteWave consolidation since closing (-33 bps), and other impacts (+21 bps), resulting from the disposal in 2016 of Dumex in China and Fresh Dairy Products in Colombia, and in 2017 the disposal of Stonyfield in the US and Fresh Dairy Products activities in Chile, illustrating Danone’s focus on active portfolio management.

On a ‘like-for-like New Danone’ basis, recurring operating margin jumped by 70bps to 14.36%, despite strong raw materials inflation. The strong improvement was driven by a number of factors such as sales growth; significant productivity gains, partly offsetting the strong negative impact from input cost inflation over the year (mainly milk, plastics and sugar); efficiencies and disciplined resource allocation behind brand investment; and the realisation of more than $50 million cost synergies in recurring operating margin from the WhiteWave integration, ahead of the initial plan.

At the start of 2017, Danone announced the launch of an ambitious efficiency program, called ‘Protein’, with an objective to deliver €1 billion sustainable savings by 2020 by making smarter spending choices. At the end of 2017, 10 out of 30 clusters, representing more than 50% of the targeted cost base, had been activated. Governance, tools and best practices have been put in place in order to start the savings delivery in 2018.

Emmanuel Faber, chairman and chief executive of Danone.

Emmanuel Faber, chairman and chief executive of Danone, comments: “In 2017, Danone once again demonstrated the strength of its portfolio, the resilience of its business model and its ability to execute. Despite volatile food and beverage markets and rising input costs, we delivered very strong full-year results, with double-digit recurring earnings per share growth in line with our latest guidance. We closed the year with an accelerated sales growth rate, outperforming the industry average, along with very strong margin improvement and free cash flow above €2 billion. In addition to strong results delivery, 2017 has been a year of preparation and continued transformation with the onboarding of WhiteWave, and the launch of our ambitious €1 billion ‘Protein’ savings program. We have also continued to strengthen our organization and governance, backing the launch of our ‘One Planet.One Health.’ vision to sustainable value creation for all our stakeholders.”

In the current year, Danone will make further progress towards its 2020 ambition through its separate focuses on both mid-term growth and short-term efficiency. It will also start rolling out the ‘Protein’ efficiency program and continue to capture the synergies from the WhiteWave acquisition. These activities will underpin its ability to deliver sustainable growth in sales and profits.

Emmanuel Faber adds: “In a trading environment that remains volatile and fragmented, we are starting 2018 with stronger foundations and I am confident that we are on track to accelerate towards our 2020 ambition, with another year of delivery against the commitment we made to our shareholders for consistent EPS growth.”