CORRECT: Danone Reports Strong Top-Line Growth; Cautious For 2012
15 Februar 2012 - 12:25PM
Dow Jones News
Dairy and bottled water company Danone SA (BN.FR) Wednesday
reported an acceleration in sales growth in the fourth quarter,
driven by higher water sales in the unexpectedly mild weather, yet
remained cautious on top-line guidance for 2012.
Danone--which sells Evian and Volvic bottled water as well as
yoghurts, baby food and medical nutrition--said that it expects
sales to increase between 5% and 7% in 2012, down from last year's
guidance of between 6% and 8%. It targets just a stable trading
operating margin, as raw material price inflation continues, which
disappointed analysts.
Like many consumer goods companies, Danone has seen slower
earnings growth from mature economies, where shoppers' income is
under pressure from tax hikes and public spending cuts, rising
unemployment and below-inflation pay rises.
Earlier this month, Anglo-Dutch Unilever PLC (UL) warned of a
difficult year ahead in a struggling global economy marked by
sluggish demand in Europe and North America but growth in
developing markets. Swiss peer Nestle (NESN.VX) is due to report
earnings Thursday.
"Looking ahead, we anticipate no improvement in the economic
environment or in consumer spending in 2012," said Danone Chief
Executive Frank Riboud, adding that the company's priorities
remained leveraging growth drivers, investing in its brands and
managing inflation while maintaining a competitive edge.
The company reported an 11% drop in full-year net profit to
EUR1.67 billion, from EUR1.88 billion, mainly due to the cost of
integrating Russian diary company UniMilk (KUNM.RS) and an increase
in the cost of debt, as gains from minority interests fell.
Underlying net profit, the company's preferred measure of
earnings which excludes non-recurrent income and expenses, rose
4.5%--broadly in line with analysts' expectations.
Danone's earnings before interest and taxes grew 9.2%--excluding
acquisitions and at constant exchange rate--to EUR2.84 billion from
EUR2.6 billion a year earlier. That corresponds to an operating
margin of 14.7%, down from 15.6% a year earlier, hit by lower
margins in its UniMilk unit, but up 20 percentage points on a
like-for-like basis.
In the fourth quarter, sales increased a higher-than-expected
7.8% on a like-for-like basis, outpacing third-quarter growth of
5.9%, as mild weather prompted a strong rise in water sales, as
well as higher prices.
Over the year, total sales rose 13.6% on a reported basis,
boosted by the acquisition of UniMilk and strong growth in emerging
markets. Volumes in the company's main dairy division, which
includes the Activia and Actimel brands, fell on a like-for-like
basis but were offset by expansion in its three other
divisions--water, baby nutrition and medical nutrition.
Danone said it expects free cash flow to continue to rise in
2012, up to around EUR2 billion. It plans to pay a dividend of
EUR1.39 per share.
"It is slightly disappointing... that the solid growth guidance
does not pull-through into an expectation of any margin improvement
in 2012," said Simon Marshall-Lockyer, analyst at Jefferies.
At 0905 GMT, Danone shares were up 1.4% at EUR49.67. They've
risen around 4% over the past six months, in line with the CAC-40
index.
-By Nadya Masidlover, Dow Jones Newswires; +33 1 4017 1754;
nadya.masidlover@dowjones.com
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