Danone's profit suffers from more expensive milk

Dairy manufacturer Danone forecasts a slow profit growth for this year, because of the higher milk prices. By 2020, the company also expects to cut costs by 1 billion euro.

WhiteWave Foods acquisition

Danone forecasts profit per share to grow 5 %, the slowest growth in three years’ time and half of the expected 9.3 % growth. 2016 net profit grew 35 % to 1.7 billion euro. Danone struggles with difficult Western European market conditions and a weaker Activia performance, pushing turnover down more than 2 % to 22 billion euro. Nevertheless, there was a 2.9 % like-for-like turnover growth, but that was the company’s smallest growth since 1997.  

The company may adjust its forecast when its WhiteWave Foods acquisition is finalized. It paid nearly 10 billion euro for the American soy milk manufacturer and hopes this deal is finalized in the first quarter of 2017. No matter when, the acquisition is a counter for the increasing milk prices and also turns it into the global market leader in soy milk.

On top of all that, Danone presented a cost-cutting program that should help it save 1 billion euro by the end of this decade. Its marketing expenses will be lowered, among other things.