Danone Q3 results 'buoyed' by Asian infant formula recovery
In its financial results for the three months ended September 30 2014, published yesterday, Danone reported a 3% increase in revenue from €5.259bn (US$6.7bn) in Q3 2013 to €5.419bn (US$6.9bn).
The Paris-based company attributed the increase in sales to "solid trends across all businesses, underpinned by a favorable basis for comparison in Early Life Nutrition."
The Early Life Nutrition division, which produces specialty foods for babies and young children, reported sales of of €1.054bn (US$1.34bn) in Q3 - up 17.3% on the €924m (US$1.18bn) reported for the same three-month period of 2013.
Danone experienced a “very steep decline” in sales in Q3 on the back of the recalls triggered by Fonterra’s August 2 2013 WPC botulism alert.
Fonterra alerted eight customers, including Danone-owned Dumex and Nutricia Australia New Zealand (Nutricia ANZ), that three batches of WPC potentially contaminated with Clostridium botulinum had entered the supply chain.
Tests later revealed that the bacteria found in the three WPC batches were Clostridium sporogenes, a non-toxic Clostridium strain.
This information came too late, however, for Nutricia ANZ and Dumex, who pulled infant formula from shelves in New Zealand, Cambodia, Thailand, Laos, Hong Kong, China, Malaysia, and Singapore, without proof their products were tainted.
Sales in the eight markets are "now back to pre-crisis levels," said Danone in its Q3 results.
“In China, the market that was hardest hit, Group brands as a whole continued to grow broadly in line with expectations," it added.
Danone's Fresh Dairy Products business, the company's largest segment, meanwhile reported sales of €2.796bn (US$3.57bn) for the third quarter of 2014, down 4% from €2.913bn (US$3.71bn) in Q3 2013.
It attributed the fall in sales to a “continued decline in sales volumes” in Europe and “slower growth” in North America and, as a result of the current situation in Ukraine, the CIS region.
“In Russia, growth remains buoyed by continued portfolio enhancement through higher prices and a very positive mix effect; low value-added segments have continued to decline in volume, affecting sales in both the geographical area and the division," said Danone.
"For the CIS as a whole, growth has in any case tapered off since the beginning of the year due to the negative performance of Ukraine.”
In the US meanwhile, the growth of Danone's Fresh Dairy Products division is "leveling off after several years of strong dynamic, particularly in Greek yogurt."
Based on its results for the first nine months of the year, Danone reconfirmed its 2014 sales growth target of between 4.5% and 5.5%.
