Paris: Danone, the world’s biggest yogurt maker, said sales growth will be slightly below its target for 2016 as its fresh dairy business shrinks for a third year, hurt by weak demand in Spain and a revamp of the Activia yogurt brand across Europe.
Revenue growth will miss the 3 per cent to 5 per cent goal, Danone said in a statement Monday. Sales increased 3.2 per cent on that basis in the first nine months.
The miss is a setback for Chief Executive Officer Emmanuel Faber, who has pledged to halt a three-year drop in shipments of fresh-dairy products. To mitigate the sales slowdown, Faber has stepped up cost cuts and an efficiency drive. Danone said Monday it expects profitability to beat its target for 2016, raising the outlook for the second time this year.
“The shares may fall strongly today,” said Vincent Baron, an analyst at Oddo & Cie.
The most recent profitability goal, set in June, was for like-for-like improvement in the recurring operating margin of 0.5 percentage points to 0.6 percentage points.
In October, Danone reported the slowest third-quarter sales growth in more than a decade amid a slowdown in baby food, traditionally one of the company’s fastest-growing businesses.
The shares have fallen 1.7 per cent this year compared with a 6.3 per cent drop for the Stoxx 600 Food & Beverage Index.
