Corinne Gretler Zurich
DANONE, the world’s biggest yoghurt maker, joined European consumer-goods peers in forecasting no pick-up in sales growth in 2015 after revenue from its fresh-dairy unit increased at the slowest pace in more than a decade last year.
Danone’s sales would rise 4 percent to 5 percent on a like- for-like basis this year after a 4.7 percent gain in 2014, the Paris-based company said on Friday.
The maker of Activia yoghurt said it expected “slight growth” in the operating margin on the same basis, which adjusts for currency changes, divestments and acquisitions. That would be the first margin expansion in four years.
Emmanuel Faber, who became chief executive in October last year, has the task of turning around the fresh-dairy business. Sales of the unit, which represent more than half the group total, rose 1.5 percent last year.
Danone’s outlook mirrors that of peers such as Unilever and Nestlé SA, both of which have forecast little or no acceleration in growth this year, weighed down particularly by difficult conditions in China.
“The main disappointment is 2015 guidance,” Warren Ackerman, an analyst at Société Générale, wrote in a note.
“Dairy still remains very concerning with volumes actually getting worse in the fourth quarter despite the high level of pricing starting to come off.”
The stock traded 1 percent lower at e58.59 (R774) close to noon in Paris on Friday. Danone has gained 13 percent in the past year.
Fresh-dairy product volume declined 7.8 percent in the fourth quarter, compared with a 6.2 percent drop in the first nine months of 2014.
The business is being reorganised after about five years of rising milk prices eroded profitability. The company has been reducing the number of plants in Europe to 16 from 24, closing factories in Italy, Germany and Hungary. Like-for-like dairy sales in the fourth quarter declined 1 percent.
“There is absolutely no reason why dairy in three years’ time should not grow close to mid-single digit,” Faber said.
“We need to get dairy in Europe back to positive territory. It will be gradually emerging until the end of the year, and there are promising signs this is happening.”
– Bloomberg