Danone owes growth to China and yoghurt

Dairy producer Danone saw its turnover grow only slightly in the first half of 2018, but its net profit went up by almost a quarter. While European sales slowed down, China’s appetite for western baby milk powder made more than up for that.

Aiming for double-digit growth

The 12.5 billion euro turnover Danone achieved was only a very small growth compared to last year’s 12.2 billion, but the French company can rejoice in an excellent 23.5 % net profit growth to 1.2 billion euro and a comparable operational profit growth of 7.9 % to 1.78 billion euro. 

While profit was just not enough to reach analysts’ expectations, turnover did achieve that feat. For the full year, Danone expects a double-digit profit growth per share – that is: excluding adverse exchange rate fluctuations and the sale of Yakult in February.

Chinese growth

The force behind this growth is the Chinese market for milk powder: troubled by food safety scandals, consumers are looking for Western brands. Danone saw its sales grow by 30 %, leaving Nestlé and Reckitt Benckiser‘s brands behind thanks to e-commerce and specialised stores. While yoghurt sales in Europe are still going down, increased sales in the United States make the French company hopeful. A Moroccan boycott due to perceived high prices has hit local turnover hard, going down a hefty 40 %.

Another strong category for the French company was its waters division, in which turnover went up 4.5 %: significantly more than the +1 % its major rival Nestlé achieved according to Bloomberg.