Danone activia yoghurts

Danone has forecast a rise in 2016 revenues and profits after posting full-year results for 2015 that it described as “solid” and “in line with objectives”.

Like for like sales were up 4.4% and total sales up 6% to €22.4bn for the 12 months to 31 December 2015. Trading operating income rose 5.7% like for like and 8.7% on a reported basis to €2,9bn, with operating margin increasing from 12.6% to 12.9%.

In the fourth quarter of 2015, consolidated sales were €5.4bn, up 3.6% like-for-like, reflecting a 1.3% rise in volume and a 2.3% rise in value.

CEO Emmanuel Faber commented: “Over the past 18 months, we have been making the changes necessary to take up the challenges of a new and ever changing world, as we pursue our purpose to provide pleasurable, healthier, sustainable hydration and eating options to our consumers each and every day.

“With organic growth of +4.4% and trading operating margin up +17 basis points like-for-like, our results are very solid and perfectly aligned with our objectives. They confirm that we have taken this mission to a new level, paving the way for strong, profitable and sustainable growth by 2020.”

Danone predicted sales growth in 2016 of between 3%-5% and a “solid improvement” in trading operating margin.

It warned that economic conditions will remain volatile and uncertain overall, with fragile or even deflationary consumer trends in Europe, emerging markets undermined by volatile currencies, and difficulties in a number of major markets, in particular the CIS, China and Brazil.

However, it also expects milk prices to edge up, with a possible rebound in the second half of the year and steady price increases in emerging countries all year long, particularly in the CIS.

Faber added: “In 2016, in a global context that remains volatile, Danone will continue to invest behind its brands and will mark a further important step to develop a balanced model of strong, profitable and sustainable growth.”

During the year its fresh and dairy division saw a 0.6% full year sales rise despite a 3% volume decline, while water was 7.1% up, early life nutrition up 9.8% and medical nutrition up 7.5%.

The overall fresh dairy products like for like revenue rise was primarily driven by growth in North America thanks to a 3.2% rise in value sales. In Europe, Danone said the division “pursued a concerted effort to gradually steer its business back to profitable structural growth”. It said in the fourth quarter the division saw a sequential improvement in volumes, supported by favourable comparables.

Overall sales in Europe rose 3% during the year, with CIS and North America up 2.6% (with a 3.8% volume decline) and its ALMA region (Asia-Pacific, Latin America, Middle East, Africa) up 6.7%.

Analysts at Liberum commented: ”CEO Emmanuel Faber has set out a clear strategy to deliver sustainable top and bottom line growth and while clear execution risks remain, we see more upside than downside at current levels. We forecast category mix alone can drive acceleration in organic sales growth and trading margin over as Dairy weighting in the group’s portfolio continues to diminish.”

Danone shares ended the day up 4% to €63.37 on the 2015 growth and bullish outlook.