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Emerging Markets Drive Danone

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Emerging Markets Drive Danone

Emerging Markets Drive Danone
February 16
15:22 2012

Strong growth in emerging markets helped Danone to increase like-for-like sales by 7.8% to Eur19.32 billion and improve its trading operating margin by 20 bps to 14.72% in 2011. The organic sales growth reflects a 3.0% increase in sales volume and a 4.8% increase due to price/mix effect. Trading operating income rose 9.2% on a like-for-like basis to Eur2.84 billion.

However, emerging economies for the first time accounted for over half of Danone’s sales and generated most of the group’s growth in sales and in trading operating income.

“The year 2011 was both tough and positive. Tough because of the increasingly gloomy macro-economic environment in urope, plus a steep rise in commodity prices that put pressure on our costs and entire organisation. But also positive because we came through successfully,” says Franck Riboud, chairman of Danone. “Our results made 2011 a successful year, as we once again met all our targets. Organic growth in sales stood at 7.8%, both full year and in the fourth quarter. We met our target for margin expansion. And our free cash flow continued to increase sharply, gaining over 9%.

Danone succeeded in continuing to grow its sales volumes throughout the year, reflecting ongoing efforts to develop its product categories, but also the competitive management of selling prices, particularly in Europe. Despite a 2% drop in volume in Europe, Danone grew like-for-like sales by 2.4% to Eur10.81 billion.

Danone’s biggest division, fresh dairy increased like-for-like sales by 4.6% to Eur11.24 billion on volume down 0.1%. The waters division registered the strongest sales growth – up 15.7% to Eur3.23 billion. Baby nutrition also achieved double-digit sales growth – up 10.7% to Eur3.67 billion. Medical nutrition sales at Eur1.18 billion rose by 9.4%.

Franck Riboud continues: “Looking ahead, we anticipate no improvement in the economic environment or in consumer spending in 2012, and our priorities for the year remain the same: leveraging our growth drivers, investing in our categories and brands, and managing inflation and volatile costs while maintaining our competitive edge.”

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