Danone sees varied results in first half
French dairy giant Danone reports that its fresh dairy products division sales were up 2.4% like-for-like in the second quarter of 2014, reflecting a steep 9.8% rise in value. However, this was offset by a 7.4% decline in sales volume.
The CIS region was the largest contributor to this division’s growth, reporting another rise in sales of more than 10%. This reflects the enhanced value of the product portfolio achieved by both price increases in previous quarters and a positive price/mix effect linked to the strong volume performance of value-added brands. Total volumes fell more sharply than in the first quarter, primarily in low value-added segments.
In the US, sales slowed in the second quarter, in particular for Greek yogurt. However, the division held onto its market share and continued to expand, with growth driven by its multi-brand Greek yogurt range.
Sales in Europe continue to decline. Europe now shows a positive price/mix effect, reflecting efforts to enhance the value of brands and price increases designed to offset rising commodity prices in some countries. This policy has come hand in hand with a volume decline of over 5% for the region as a whole, reflecting contrasts from one country to the next. Sales have stabilized in Iberia (Spain and Portugal), while both Germany and Italy are still difficult markets.
Danone’s early life nutrition division reported quarterly sales down 9.2% (-7.9% in volume), reflecting the unfavorable basis for comparison linked to the false safety alert triggered by Fonterra in August 2013.
In China, the market most affected by the alert, the division has pursued actions designed to get sales back on track with a multi-brand approach to optimize cover of different distribution channels and different price segments. The Nutrilon brand achieved rapid growth in the ultra-premium segment, while initial results for Dumex fell slightly short of projections. Overall results are in line with expectations.
In Europe, Q2 2014 growth was moderate, while division business remained buoyant in the rest of the world, with double-digit growth in Latin America and in the Africa/Middle East region.
