Danone doubles profits, infant nutrition remains key driver of sales

Danone, the French food company, has posted an increase in net income of 111.5% for the first half of 2016 compared to the same period in 2015, with profits of €880m.

In the second quarter of 2016, consolidated sales at Danone stood at €5,746m, up 4.1% on a like-for-like basis. The company attributed this growth to a 1.0% rise in volume and a 3.1% rise in value.

Danone’s Early Life Nutrition division reported a 7.2% like-for-like rise in sales, including a 1.9% increase in volume and a 5.3% price-mix improvement.

In Europe, sales growth from domestic demand remained solid while so-called ‘indirect’ sales to China slowed due to increased short-term volatility linked to ongoing changes in the Chinese regulatory environment.

At the same time, growth in the Asia-Pacific, Latin America, Middle-East, Africa (ALMA) region accelerated, according to Danone.

Danone said that this reflects both a steep rise in sales in Oceania (Australia and New Zealand) and an increase in direct distribution in China through specialised stores and local e-commerce offerings.

Backed by strong international brands (Aptamil and Nutrilon), Danone has continued to progress in its journey to build a sustainable model of growth in a still promising market.

Commenting on the results, Danone CEO Emmanuel Faber, said that with organic sales growth above 4% in the second quarter and a very strong improvement in margin and EPS this semester, Danone demonstrated once again its capacity to successfully rebalancing its growth model.

“We continue to implement our agenda to transform the company and increase the resilience of our business model.

“Our decision in June to upgrade the margin guidance for 2016 is further evidence of Danone’s attention to ensure that any decision of investment enables to reach short and long-term objectives in a disciplined manner.

“With fast-evolving dynamics in some emerging markets and an environment that remains complex, we are sticking to our priorities and the Q2 results reflect key steps in our journey, notably in dairy with confirmed success in the US and sequential improvement in Europe,” he said.