Danone reports profit fall, sales surge

27th July 2010, Comments 0 comments

Food multinational Danone reported on Tuesday a surge in first-half sales and raised its sales forecast, but net profit dropped 10 percent because of an exceptional boost to the baseline 12 months ago.

The net profit figure was 838 million euros (1.0 billion dollars).

The equivalent figure last year had been inflated by capital gains from the sale of its subsidiary in Australia and New Zealand, Frucor, specialising in energy drinks.

Sales rose by 11.0 percent, or by 7.0 percent on a comparable basis, to 8.36 billion euros. Sales in Asia rose by 13.8 percent, in Europe by 1.7 percent and in the rest of the world by 16.0 percent.

In the second quarter, sales rose by 14.0 percent to 4.38 billion euros.

But the price of shares in the group fell by 3.24 percent in morning trading to 44.82 euros.

The French group, which makes yoghurt and produces Evian water and Bledina baby food, raised its forecast for growth of sales this year to a minimum of 6.0 percent on a comparable asset base, from 5.0 percent expected previously.

Finance director Pierre-Andre Terisse said that performance in the first half had been "very firm", notably in the sectors of medical nutrition and food for babies. But most sales continued to be generated by fresh milk products.

Terisse said that Danone, having responded to the economic downturn by reducing prices, would move away from this strategy progressively.

At brokers Aurel gbc, analysts said that "the growth in emerging countries" and the company's position in "some of the most dynamic categories of food products should enable it easily to maintain its target" for growth of sales this year.

The results exceeded forcasts by Aurel which had expected a net profit of 820 million euros and sales of 8.25 billion euros.

© 2010 AFP

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