Danone SA (ADR)(OTCMKTS:DANOY) Registers Strong Performance In Europe


Danone SA (ADR)(OTCMKTS:DANOY) reported that third-quarter revenue was supported by a robust performance in Europe and on strong growth recorded in its water and baby food segments, as the French dairy firm advances after facing a series of issues in last few years. The company, whose main brands include Activia and Actimel, stated that revenue for the quarter ended September 30 surged 4.2% to $6.36 billion from a year earlier.

The problems

In last few years, Danone SA (ADR)(OTCMKTS:DANOY) faced several problems including food-safety jolts in Asia and a passive economy in Europe. Emmanuel Faber, the new CEO, took the control of the company in October 2014 and is determined to bring sustainable growth back to company. The management is reviewing its operations in China and restructuring its fresh dairy segment. Robust growth in water, medical nutrition and baby food in the quarter made up for a 3% decline in fresh dairy unit, the company’s largest operations being revamped having been suffered by declining revenue in recent years.

The highlights

The analysts at Bernstein stated that Danone’s objective of delivering consistency became a reality in the three quarters of 2015, nothing remarkable, but consistent and solid. Danone reported sales in its baby food segment surged 12%, supported by exports to China where customers are shunning locally manufactured brands to purchase foreign-made products on the Internet.

Earlier in the year, the management called that it time to implement measures to revive Dumex baby-formula in the nation and said revenue at the division were down. The company’s water unit reported an increase in revenue of 12% despite witnessing a slow growth of non-alcoholic beverages in China. Danone SA (ADR)(OTCMKTS:DANOY) reported that revenue in its core fresh dairy segment increased 0.6% on a ‘like-for-like’ basis as the segment benefited from a decline in milk prices in the U.S. and Europe.