Danone reports a 16.6% increase in sales, driven by China

FRANCE – Danone dairy company has reported a 16.6% increase in sales in the company’s Q3 2017 results, which brought the value to US$7.52, due to the strong performance recorded in infant formula sales in China.

The strong performance was reflected in the company sales, as it recorded an increased 17.8% in the three months to September, according to the group third quarter sales report.

It also showed progress in Danone’s strategic priorities, which had included expansion of tailored nutrition products, which grew at mid-teen percentage in the three month period.

According to Reuters, the strong sales in China contributed to a 4.7% rise in underlying third-quarter like-for-like sales, far above analysts’ average expectation of 2.8%, and the 0.2% growth it had reported in the second quarter.

“Danone is successfully harnessing demand in e-commerce and specialized Mom & Baby store channels, possibly at the expense of Mead/Reckitt in this period, we think,” Investec analysts said in a note.

Analysts also said Danone’s indirect e-commerce sales might have benefited from China’s decision to delay regulation of cross-border e-commerce until the first quarter 2019 from the first quarter 2018.

“The infant category is said to have accelerated but we also assume Danone has benefited disproportionately from the delay of the new regulations which has supported growth in consumer to consumer channel,” Barclays’ analysts said.

Danone has had slower growth overall than its rivals, which include Unilever, largely due to weakness in its dairy business in Europe which has had to contend with sluggish demand and private label competition.

During the announcement of its strong sales figures, Le Monde had reported that the company’s chairman, Franck Riboud, 61, was to stand down and hand over to chief executive Emmanuel Faber, 53, who will become both chairman and CEO.

However, Danone had declined to comment on the report.

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