Danone serves up heaping first-half profits

3rd August 2006, Comments 0 comments

PARIS, Aug 2, 2006 (AFP) - French food giant Danone doubled first-half net profit to EUR 704.0 million and raised its growth target on Wednesday, reporting strong business in Asia, the Americas and eastern Europe.

PARIS, Aug 2, 2006 (AFP) - French food giant Danone doubled first-half net profit to EUR 704.0 million and raised its growth target on Wednesday, reporting strong business in Asia, the Americas and eastern Europe.

The price of shares in Danone, periodically the target of takeover rumors because its investor base is fragmented, shot up by 3.67 percent to a record EUR 104.40 in midday trading in Paris.

Danone led gainers in the CAC 40 index of leading shares, which was up by 1.04 percent overall.

Danone chairman and chief executive Franck Riboud said he was "confident of the group's capacity to continue developing at a strong rate in 2006".

Finance director Antoine Giscard d'Estaing said the second-quarter performance "is the result of continued improvement of activity in France" and that "growth is still very strong in Asia, in North and South America and in eastern Europe".

Internal growth was strongest in the first half in Asia where business had increased by 17.8 percent, and in the rest of the world by 16 percent. Growth in Europe was 4.5 percent.

Danone said it now expected internal growth of its business to be seven to eight percent this year instead of five to seven percent set earlier, and revised upwards growth of net current earnings per share to about 15 percent this year from about 10 percent earlier.

Net profit in the first half was EUR 704.0 million from EUR 346.0 million in the same period of last year

Capital gains from the sale of sauce activities in Asia and Danone's biscuit business in New Zealand contributed to the result but the company suffered an asset loss of EUR 130 million on its European unit for distributing drinking water in multi-gallon containers.

Analysts at brokers Crédit Mutuel CIC commented that growth in the first half had been "exceptional" but said that the operating margin was slightly disappointing.

The current operating margin rose from 13.31 percent in the first half of 2005 to 13.46 percent in the first half of 2006. But the drinks division continued to suffer from a rise of raw materials costs in Asia.

Sales in the first half rose, on the basis of a constant asset base and constant exchange rates, by nine percent to EUR 7.22 billion from EUR 6.35 billion.

This was "the best in the history of the group" owing to an increase of 6.8 percent in the volume, and of 2.2 percent in the value, of sales.

Second-quarter sales rose by 8.9 percent after an increase of nine percent in the first three months of the year.

Danone said it bought back 325 million euros' worth of its own shares in the first half, and that net debt fell from EUR 3.57 billion at the end of December 2005 to EUR 3.411 billion at the end of June.

Copyright AFP

Subject: French news

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