French food manufacturer Danone has lowered its full-year turnover prognosis. A stark drop in Asian sales of milk powder had a big negative effect.
Milk powder problem
Recently, Danone had to remove milk powder in eight Asian countries, after it had been revealed it might have contaminated ingredients. Further analysis proved it was a false alarm, but the damage had already been done. Danone is now looking to recuperate the damages, at least 200 million euro, by tackling supplier Fonterra.
Recalling the powdered milk has caused Danone some “significant losses in sales, earnings and cash-flow. Measures to repair the damages are starting to pay off, but only very slowly.” The company had a third quarter turnover of 5.3 billion euro. Its full-year prognosis has been scaled down at least 5 %, resulting in a possible turnover growth of 4.5 to 5 %.