Danone results hit by Galbani disposal

EUROPE – Food group Danone announced on Tuesday that its net profit dived 81% in 2001, partly due to losses it will incur on the loss making sale of its Italian cheese and ham subsidiary Galbani.

Net profit for 2001 was 132 million euro, down from 721 million in 2000. This was due to exceptional charges of 648 million euro. 475 million euro of this was in allowances for Galbani, with the rest made up of costs involved in the restructuring of Danone’s biscuit business.

Danone was not expected to be affected by the Galbani sale yet, but said that it was writing off the capital due to “impairment to Galbani’s goodwill”. Net profit excluding exceptional costs was 780 million euro for 2001, up 8.3% on 2000.

The fresh dairy products division is Danone’s largest department. It reported operating profits of 790 million euro for 2001, up 11% on 2000. Operating margin was 11.4% in 2001, up from 10.9% in 2000.

Looking ahead, the company predicted sales growth of 5% and an increase in profit margin for 2002

With the results, Danone announced a dividend of 2.1 euro per share, up 8.4% on its dividend for 2000.

Last week, Italian food company Parmalat confirmed that it is no longer in exclusive talks with Danone over the purchase of Galbani. It has been reported that UK buyout specialist BC Partners has expressed interest in Galbani.