FRANCE: Danone Waters posts nine-month sales jump after sunny Q3
- YTD net water sales up 12% to EUR3.08bn (US$4.21bn)
- Volumes up 7% over same period
- Q3 water sales up 17% to EUR1.09bn
Danone was forced to recall some products in Asia
Danone's water unit has posted a strong jump in year-to-date sales as good weather in Europe helped boost volumes.
The French dairy giant, which lowered its overall full-year outlook following a recall of infant formula in Asia, posted a 12% sales increase in its Danone Waters business in the nine months to the end of September. Water volumes were up by 7% over the same period, Danone said in a trading update on Wednesday (16 October).
Third-quarter results were also positive, with water sales up by 17% and volumes up by 9%.
The figures reflected a “vigorous performance in Europe, amplified by favourable summer weather”, Danone said. It also praised growth in emerging markets and “robust” growth in aquadrinks in Europe. The aquadrinks category includes flavoured water brands such as Danone's Aqua D'or.
The August recall, which came after Danone's whey protein supplier Fonterra warned some of its ingredients may contain bacteria that could cause botulism, led Danone to miss overall like-for-like sales expectations in Q3, with comparable group sales up 4.2% compared to consensus expectations of 4.8%. Volumes and reported sales also missed expectations at 1.6% and 0% respectively, compared to consensus analyst forecasts of 3.6% and 2.8%.
The company also implied the damage done to Danone's reputation was continuing to drag on sales. “Action plans to restore sales are being deployed in affected markets and are generating results effectively but very gradually,” Danone said. The recall turned out to be unneeded as no bacteria was found in the whey protein.
Danone and Fonterra are currently in a "dispute resolution process", with the French group seeking damages after the recall, which also affected the Coca-Cola Co's Greater China unit.
Danone's group share price dropped about 5% after results were released, but has since rebounded.
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