Danone reports sales up 4.5%, fresh dairy sales down year-on-year

Danone has posted a 4.5% year-on-year increase in sales for the second quarter (Q2) of 2015 and sales in the first half (H1) are up 4.6% year-on-year.

Infant formula sales for Q2 were up 11.1% on the year, this includes a 7.3% rise in volume and a 3.8% rise in value, it says.

Infant formula in the Chinese market continues to benefit from a boom in online sales, Danone says and combined with the popularity of our Aptamil and Nutrilon brands, generated double-digit growth for European sales.

Sales of fresh dairy products were down 1.1% year-on-year in Q2, which Danone says reflects a 3.2% decrease in volumes and a increase of 2% price/mix effect.

Danone says that, as anticipated, this was below Q1 figures with the improvement in volume offset in the second quarter by a less favorable base for comparison in price and mix, particularly in Russia.

European sales have continued to decline, with performance limited by the basis for comparison in volume that preceded streamlining of the product portfolio starting in mid-2014, it says.

The company says that its 2015 sales growth is on target; it had expected sales growth in Q2 between 4-5%.

Consolidated sales rose 8.8% in H1, it says, as reported in the first half of 2015 to reach €11.3m.

Excluding the impact of changes in the basis for comparison, which include exchange rates and scope of consolidation, Danone reported that sales were up +4.6% on H1 2014.

As expected in H1, Danone says that it continued to benefit from the lower prices of strategic raw materials, with milk in particular down from record highs in the first half of 2014.

However, it also says that the year-on-year improvement should dwindle over the next six months, since milk prices had already slid sharply in the second half of 2014.

Outlook

Danone says that it assumes that economic conditions will remain difficult and unstable overall, with fragile or even deflationary consumer trends in Europe, emerging markets undermined by volatile currencies, and difficulties specific to a few major markets, in particular the Commonwealth of Independent States (CIS).

In 2015, Danone also anticipates marked but varied trends in the cost of major strategic raw materials, particularly milk:

  • Lower prices in Europe and the United States in the first half, with a rebound likely in the second half of the year.
  • Gradual price increases in emerging countries all year long.

Altogether, Danone says it anticipates a moderate rise in the cost of main raw materials and packaging in 2015.

In Europe, the company says it will continue to strengthen its competitive edge while in growth markets, it will focus on developing its product categories, in particular through strong local brands in the most attractive geographical markets.

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