FRANCE: Danone into the red in first half
Although operating profit at the group was flat at €795m, the company booked one-off charges of €1.03 billion in the first half to cover goodwill impairment. The group said that two-thirds of the one-off charge came from writing off goodwill in emerging markets, principally Argentina and Brazil. The balance of the charge was the €305m related to its tie-up with Coca-Cola in the US.
Analysts had anticipated a charge of around €300m in relation to the US but had been predicting net profit for the first half in the region of €214m. However, Danone said that it planned to book a €1.5 billion capital gain in September from its disposal of Kronenbourg to S&N in 2000. Therefore, Danone said, net income "should be significantly positive for the full year".
However, Danone chief financial officer, Emmanuel Faber, warned that if the US dollar remains roughly at parity with the euro, the company's earnings could be reduced by 3% to 4%. Faber said that the weak dollar had reduced Danon's first half profit by about 3%. "If parity were to be in place through next year that would take maybe 2% to 3% off our profit," Faber said. "But we're not as exposed to currency fluctuations as some of our rivals since we don't have the same level of US exposure."
The group's sales revenues for the first half fell from €7.29 billion to €7.15 billion. The fall was particularly sharp in the second quarter when sales slipped by 7.8% from €3.87 billion to €3.57 billion. However, the company said it was standing by its revenue growth target for the full year of at least 5.2% on a like-for-like basis.
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