Emmanuel Faber, Danone chief executive, has declared 2018 “a year of delivery and execution” and expects the French food group to lift revenues and profits.
The maker of Activia yoghurt and Evian water said on Friday that like-for-like sales rose 2.5 per cent year on year during 2017 to €24.7bn, boosted by an increase of 4.2 per cent in the six months to the end of December as growth accelerated.
This was just ahead of analyst expectations but less than last year’s 2.9 per cent rise and the slowest organic growth for 20 years.
A strong performance in Danone’s specialist nutrition and waters businesses offset lacklustre performance in dairy, its largest division, where like-for-like sales contracted 1.3 per cent. Negative growth in Europe and North America was offset by robust growth in the rest of the world.
Earnings per share were 14.2 per cent higher at constant exchange rates, in line with its full-year guidance.
Shares in the group were 2.4 per cent higher by early afternoon in Paris at €65.64.
Danone, like its rivals Nestlé and Unilever, is facing investor pressure to increase revenues and profits as food groups wrestle with slowing growth and adjust to consumers’ increasing appetite for healthier choices. To adapt to this shift, last year Danone completed the $12.5bn acquisition of WhiteWave, the US organic food group, launched a drive to cut €1bn in costs by 2020 and streamlined management.
It said on Friday that the integration of WhiteWave was progressing well with more than $50m of synergies achieved last year, ahead of target.
This week Danone announced it would sell down two-thirds of its stake in Yakult, the Japanese probiotic dairy drink maker, a holding with a market value of about ¥189.8bn (€1.43bn), to improve its capital position following the WhiteWave deal.
Mr Faber said on Friday that “2018 is a year of delivery and execution” adding: “I think we have exactly what we need to go through the next three years.”
Robert Waldschmidt, head of consumer at Liberum, said: “I like the focus of driving profitability and not just driving revenues at any cost. All the things that investors wanted to see before Faber took over as chief executive are now really coming through.”
It emerged last summer that Corvex, a US activist hedge fund, has built up a $400m stake in Danone. Mr Faber said that he has had “zero” dialogue with Corvex.
He added: “We didn’t wait for activists to launch the €1bn savings. We have not waited for activists to review our portfolio and on Yakult, this is a relationship that I personally established in 2000 [ . . .] I will not let activists jump into discussions with a Japanese partner.”
Danone said it was on track to hit its 2020 targets and is expecting double-digit recurring earnings per share growth in 2018, excluding the Yakult disposal.
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