Danone releases first half 2011 results
Dairy giant Danone reports strong sales in the first half of 2011, with an increase of nearly 6% in fresh dairy in volume sales growth and 9.6% in infant nutrition over the previous year. Asia showed great improvement, with 19.5% volume growth in sales for the first half of 2011. Consolidated sales increased +16.3% to EUR9.7 billion in the first half of 2011. Excluding the impact of changes in exchange rates (-0.8%) and the scope of consolidation (+8.4%), sales were up +8.7%. This organic growth reflects a +4.0% increase in sales volume and a +4.7% increase in value, according to Danone.
However, it was not all good news. Exchange-rate effects reflect unfavourable trends that started in the second quarter for currencies including the US dollar, the Argentine peso, the Russian ruble and the Chinese yuan. The main change in the scope of consolidation was the integration of Unimilk (Russia) for the full six months.
Danone’s fresh dairy division sales increased by +5.5% on a like-for-like basis in the second quarter of 2011, reflecting a slight volume decline of -0.2% and a +5.7% increase in value. Excluding Unimilk, fresh dairy division sales continued the trend observed in the previous three quarters, rising +5.4% like for like due to a combination of +2.6% volume growth and a positive price effect of +2.8%. Growth in sales value reflects ongoing competitive price increases that began to be implemented across most countries in the first quarter.
Sales in Western Europe were steady compared with the second quarter of 2010, while emerging markets continued to report double-digit growth. Activia, children’s brands and indulgent brands were the division’s main drivers, due in particular to innovation that continued at a steady pace.
In Russia, Unimilk continued to concentrate on its priorities: improving its product mix, increasing profitability, and making the Danone-Unimilk merger a success. Focusing on products with higher added value led to a major increase in this category, whereas traditional products, including milk, saw a decline in volumes, due in part to certain products being discontinued. Sales volumes thus fell back -11.2%, whereas the product mix/price effect was +17.1%. Margin increased steadily throughout the six-month period, driven notably by a decline in milk prices and the first benefits of synergies achieved through integration.
The baby nutrition division pursued its strong trend with sales up +9.6% like for like, based on +5.2% volume growth. The robust +4.4% increase in value reflects two factors: the discontinuation of non-strategic commodity milk powder business in the Middle East and price increases in some regions. All regions reported growth, with Indonesia, China, the United Kingdom and Turkey the division’s main drivers. Growing-up milks continued to deliver double-digit growth.
According to Danone CEO Franck Riboud, “Danone has once again met its targets in a persistently difficult environment shaped by trends in consumption and rising raw material prices. All of our business lines and geographical regions reported growth. We have also met our margin targets, countering steep rises in raw material costs with major efforts to raise productivity and fine-tune pricing.
“Danone-Unimilk is on track to achieve its targets and its priorities: building key brands, increasing operating margin and integrating employees from both partners, which will be complete by the end of the year.”
