Danone Waters sales division down on 2008

Danone Waters sales division down on 2008

Danone Waters has reported a drop in full-year sales, although volumes grew strongly in emerging markets.

Sales in the Waters division dropped to EUR2.58bn (US$3.54bn) for the 12 months to the end of December, from EUR2.87bn in the previous year. On a like-for-like basis, sales rose 1% for the year, said the producer of Evian and Volvic bottled waters.

In the fourth quarter sales increased 3.8% on a like-for-like basis. Underlying volumes continued to be strong at 7.6% for the quarter, which were partly offset by a negative value effect of -3.8%. 

Volume growth, however, continued to be entirely driven by the emerging markets (52% of the sales of the division), with continued strong performances in Indonesia, Mexico and Argentina.

While the performance of Spain and Japan remained weak, depletion rates in France, the UK, and Germany confirm an underlying performance rebound that started in the third quarter, said Danone.

Danone Groupe booked an increase in full-year profits but said it will continue to face a “challenging” financial and economic environment in 2010.

For the 12-month period, underlying net income reached EUR1.14bn, a 7.5% increase on 2008.

Sales dropped 1.6% to EUR14.98bn. Excluding the effects of changes in exchange rates and in scope of consolidation, total sales increased by 3.2% on a like-for-like basis. This was driven by a 5.2% rise in volume and a 2% decline in price/mix.

“Danone assumes it will continue to face a challenging financial, economic and social environment in 2010, with continued difficult consumption trends in western economies, weak emerging currencies, and inflation of raw materials,” Danone said.

“In this context, we will continue to focus on the development of our categories, the strengthening of our competitive positions and on the development of our brands.  The growth of our free cash flow will continue to be one of our key priorities, and we will use productivity gains as well as selective and competitive pricing to manage cost inflation.”

Based on medium-term objectives announced in November, Danone said it expects a like-for-like sales growth of “at least” 5% and an increase of the free cash flow from operations of at least 10% on a reported basis.

In addition, Danone targets a stable trading operating (EBIT) margin versus 2009 on a like-for-like basis.  

“2009 marks the end of numerous adjustments which we have implemented in the past 18 to 24 months in order to strengthen our model and adapt it to the new environment: this includes the change in our Asian footprint, the strengthening of our financial structure, the improvements of the category trends in Waters and the focus on global brands in Baby and Medical,” said Franck Riboud, Danone chairman and CEO.

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