Slow Start For Danone
Danone has made a slow start to 2017 with like-for-like sales growth of 0.4% to €12.13 billion for the first half. Operating income rose by 7.3% on a like-for-like basis to €1.72 billion and recurring operating margin improved by 91 bps to 14.18%.
The strong improvement in operating margin reflected a first delivery of cost synergies in North America from integration of the WhiteWave acquisition as well as Danone’s endeavours for continued structural efficiencies, through portfolio mix management and productivity gains, that mitigated the strong negative impact during the first half from inflation on raw materials (mainly milk and plastics).
Emmanuel Faber, chief executive of Danone.
In the first half of 2017, Danone launched three country pilots in order to kick-off its Protein program, an efficiency program aimed at maximizing and accelerating efficiencies in a sustainable manner, with the objective to deliver €1 billion of sustainable savings by 2020.
“As expected, the slow start of the year is the result of specific emerging markets’ headwinds and challenges in Europe and in North America, balanced with significant successes in developing sustainable platforms in Specialized Nutrition in China, growing young and local Dairy brands in Europe and executing the Dannon Pledge in the United States,” explains Emmanuel Faber, chief executive of Danone. “Momentum was strong also in our Medical Nutrition and Waters platforms and in former WhiteWave brands such as Alpro, Vega, and International Delight.”
He continues: “The very strong improvement in margin and EPS growth this semester again bodes well for our ability to reach our objectives for the year, with expected growth acceleration in the course of the second half. I am pleased with the structural progress we have made during H1, in securing short term delivery while preparing for growth acceleration and long term transformation. As we continue to aim at building a more resilient model, in deeply transforming consumer and civil society environments for our industry, our new company signature and identity ‘Danone, One Planet. One Health’ will guide us with many others through this Alimentation Revolution.”
