Danone: 2016 sales growth at food group set to be just below target

Company says it will beat 2016 target for recurring operating margin improvement


French food group Danone said on Monday that it expected its 2016 sales growth to be slightly below its original targets due to a weaker-than-expected fourth-quarter performance at its European dairy business.

Danone said that, nevertheless, thanks to continued work on its cost base, it would beat its 2016 target for recurring operating margin improvement.

Danone blamed problems with the rollout of its new brand strategy for Activia in some parts of Europe and worsening market conditions in Spain for the revenue shortfall.

Danone had previously set for 2016 like-for-like sales growth of 3-5 per cent and a recurring operating margin improvement of 50-60 basis points. It reported in October a worse-than-expected slowdown in third quarter sales growth as difficulties in China hurt its baby food and water divisions.

Danone shares are down by around 2 per cent so far in 2016, while the broader Stoxx Europe 600 Food & Beverages index has fallen 6 per cent in that period.

– Reuters