Danone has posted better than expected profits after strong growth in its water division. Net profit was €2.45bn ($3.06bn) compared with €1.72bn the previous year. Analysts had expected net profit of €2.14bn.
The improvement in the last quarter was driven by very strong growth in specialized nutrition (8.4%) and waters (10.3%) with improvement in Essential Dairy & Plant-Based (EDP) International and Noram.
In 2017, EDP International sales decreased by 1.3% on a “like-for-like New Danone” basis, including a 6.1% decline in volumes and a 4.8% rise in value. In the fourth quarter, sales were broadly flat (down 0.3% on a “like-for-like New Danone” basis), showing solid progress in most regions.
Full-year reported sales were up 12.5% versus 2016. Sales of Alpro, now the second-largest dairy brand in Europe, rose nearly 10% in the fourth quarter, driven by robust demand for nut-based beverages and plant-based alternatives to yogurt. Alpro is the market leader in its top-four countries—the UK, Germany, Belgium and the Netherlands—that together account for nearly 80% of its sales.
Emmanuel Faber, Chairman and Chief Executive Officer, said: “Despite volatile food and beverage markets and rising input costs, we delivered very strong full-year results, with double-digit recurring earnings per share growth in line with our latest guidance. We closed the year with an accelerated sales growth rate, outperforming the industry average, along with very strong margin improvement and free cash flow above €2bn.
"In addition to strong results delivery, 2017 has been a year of preparation and continued transformation with the onboarding of WhiteWave, and the launch of our ambitious €1bn ‘Protein’ savings program.
“In a trading environment that remains volatile and fragmented, we are starting 2018 with stronger foundations and I am confident that we are on track to accelerate towards our 2020 ambition, with another year of delivery against the commitment we made to our shareholders for consistent EPS growth.”
According to Reuters, shares in the company rose around 1%, outperforming France’s main share index. The stock is down 7% so far this year, erasing almost half of last year’s gains.
Danone, whose brands include Evian Water, Activia yoghurt and Bledina baby food, said it was targeting a double-digit rise in 2018 underlying earnings per share (EPS), excluding the impact of the sale of a $1.9 billion stake in Japan’s Yakult announced this week.
The company, alongside consumer goods peers such as Nestle and Unilever, is under investor pressure to improve results and it needs to deliver on 2020 profit margin and sales growth targets it set last year.