Food group Danone eyes further sales and profit growth for 2018 (updated)

Yakult Honsha

16/02/2018 07:17

* 2017 like-for-like sales growth slightly above f/cast 
    * Operating margin also ahead of estimates 
    * Eyes double-digit recurring EPS growth in 2018 
 
 (Adds details from statement) 
    By Dominique Vidalon 
    PARIS, Feb 16 (Reuters) - Food group Danone  DANO.PA  said 
on Friday it would focus on accelerating sales growth this year 
and deliver a further rise in profits, thanks to cost cuts and 
the benefits from its acquisition of U.S. organic food group 
WhiteWave. 
    Danone, the world's largest yoghurt maker, said it was 
targeting a double-digit rise in 2018 recurring earnings per 
share (EPS) at constant exchange rates, excluding the impact of 
the sale of a stake in Japan's Yakult announced this week. 
    Danone said the integration of WhiteWave was progressing 
well with more than $50 million synergies delivered in 2017, 
ahead of plan, and it achieved 14.2 percent EPS growth in 2017, 
in line with its guidance. 
    "We are starting 2018 with stronger foundations and I am 
confident that we are on track to accelerate towards our 2020 
ambition," Chairman and CEO Emmanuel Faber said in a statement. 
    "In 2018, the company will progress toward its 2020 ambition 
through further sales growth and an improved recurring operating 
margin," added Faber, whose company's brands include Evian water 
and Actimel yoghurt. 
    The company, alongside consumer goods peers such as Nestle 
 NESN.S  and Unilever  ULVR.L , is under investor pressure to 
improve results and it needs to deliver on 2020 profit margin 
and sales growth targets it set last year.  urn:newsml:reuters.com:*:nL8N1LN3KH 
    Like-for-like sales in 2017 rose 2.5 percent to 24.677 
billion euros ($31 billion), slightly above analysts' 
expectations of 2.4 percent growth. 
    This was also slightly better than the 2.4 percent reported 
by Nestle on Thursday. It marked, however, a slowdown from 2016 
and the sixth consecutive year of a sales slowdown for Danone. 
 urn:newsml:reuters.com:*:nL8N1Q51A1. 
    Danone has suffered slower growth overall than its rivals, 
largely due to weakness in its dairy business in Europe, which 
has had to contend with sluggish demand and the relatively 
unsuccessful Activia re-launch, while in China its baby food and 
waters businesses have had regulatory issues. 
    Sales growth, nevertheless, started accelerating in the 
third quarter of 2017, driven by stronger demand for baby milk 
formula in China and mineral waters, and fourth quarter sales 
confirmed that trend with like-for-like sales of 3.7 percent. 
    The purchase of U.S. group WhiteWave, which makes almond 
milk and organic products, is intended to boost Danone's profit 
margins, given WhiteWave's generally affluent clientele. 
    The group's 2017 operating margin rose by 70 basis points to 
14.36 percent of sales, slightly above analysts' expectations of 
14.26 percent of sales. 
    Danone, which said earlier this week it would sell a 1.5 
billion euros stake in Japanese company Yakult  2267.T , said 
free cash flow rose 18.4 percent to over 2 billion euros. 
    Danone trades at 17.1 times estimated 12-month forward 
earnings against 20.1 times for Nestle and 18.3 times for 
Unilever. The stock is down 8.3 percent so far this year, having 
gained 16.2 percent last year. 
    ($1 = 0.7973 euros) 
 
 (Reporting by Dominique Vidalon 
Editing by Sudip Kar-Gupta) 
 ((dominique.vidalon@thomsonreuters.com; +33149495432; Reuters 
Messaging: dominique.vidalon.reuters.com@reuters.net)) 
 
Keywords: DANONE RESULTS/