Danone lowers 2016 turnover forecast

French dairy giant Danone lowered its 2016 turnover forecast because of the difficult European dairy market conditions.

Weak Activia performance

Danone mainly refers to the Activia brand’s weak performance and the deteriorated Spanish market conditions, which is why it expects lower turnover than previously anticipated. It expected a 3 to 5 % turnover growth, but will probably not reach that. However, its operational profit margin should end up higher than expected.

Danone’s third quarter results were also not that positive, with its slowest growth in the past decade. Nevertheless, the company points to change in China, a country that implemented a higher tax on imported baby food. That is also why retailers preferred to sell their current stock.

For a very long time, Danone took advantage of strong Chinese sales, after several local food scandals, which had scuppered the Chinese consumer’s faith in local products.