French dairy producer Danone has had a better-than-expected half-year. Thanks to new price increases, sales rose 6.3 % and grew in all regions – except for one…
700 million lost in Russia
The first half of this year brought Danone net revenue of 14.17 billion euros, accounting for 8.4 % growth on a like-for-like basis. Volume fell by 1.1 %, but this was more than offset by price increases averaging 9.4 %. Growth also came from (almost) all regions.
Comparable growth in the second quarter was 6.4 %, with Latin America (+ 10.8 %) and China (+ 9.6 %) as the strongest growers. In Europe, sales rose 6.5 %. For the full year, Danone now expects comparable sales growth between 4 and 6 %, with a moderate improvement in recurring operating margin.
Meanwhile, Danone continues to struggle over its Russian operations, which were nationalised by the government last week. At the head of the Russian arm now appears to be Yakub Zakriev, the Chechen agriculture minister and nephew of the Chechen leader. Danone nevertheless believes it is still the legal owner and wants to protect its rights and employees. Yet the company is already recording a one-off impairment of 200 million euros, on top of a depreciation of 500 million euros.