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Danone on Course to Meet 2013 Targets

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Danone on Course to Meet 2013 Targets

Danone on Course to Meet 2013 Targets
July 31
11:54 2013

Danone has increased sales by 6% to €11.06 billion in the first half of 2013, reflecting a 3.5% growth in sales volume and a 2.5% rise due to price/mix effect. However, trading operating margin slipped 49 bps to 13.34% – a decline similar to that observed in 2012 but in line with targets.

As in 2012, lower sales in Europe continued to cut significantly into group profitability, while outside Europe margin as a whole continued to rise. Raw material prices increased substantially once again, albeit more moderately than in the first half of 2012, with inflation on milk and dairy ingredients rising faster than anticipated. Negative exchange-rate fluctuations also came into play.

Free cash-flow in the period amounted to €714 million excluding exceptional items.

“With sales up 6% in the first half, Danone is off to a strong start in 2013 in an economic and consumption context that remains difficult in Europe and in some cases volatile in emerging countries,” says Danone chairman and chief executive Franck Riboud. “In Europe, simplifying our model and reducing costs remain a priority. Our organizational adaptation plan is now being deployed, right on schedule, with the first benefits expected from the second semester onwards. Meanwhile, adjustments to our product portfolio are beginning to pay off.”

He continues: “In emerging markets and in North America, our profitable growth drivers are fully operational. In these markets, we are continuing to build our brands and our organizations, while at the same time laying the groundwork for future growth. This is the point of our various initiatives in the first half of 2013 – the full integration of Central Laitière in Morocco, our partnerships with COFCO and Mengniu to expand the Fresh Dairy Product category in China, our move into the promising organic baby nutrition segment with the acquisition of Happy Family in the United States, as well as the strategic partnership we’ve just finalized with Starbucks.”

Danone has confirmed its full-year 2013 targets of sales growth of at least 5%, trading operating margin down by between 50 and 30 bps, and free cash-flow of around €2 billion excluding exceptional items.

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