Danone sees 4.5% gain in annual earnings to reach €1.75bn

Sales growth in infant formula and bottled water products have helped lift French yoghurt firm Danone to a 4.5% gain in annual earnings, according to its newly released 2011 accounts.

Adjusted net income at the world’s largest yoghurt maker rose to €1.75bn from €1.67bn a year earlier. For the full year, Danone generated revenues of €19.3bn.

In unveiling the positive global results in Paris yesterday, Danone chief executive Franck Riboud said the group still has the financial capacity to make acquisitions, but not on the scale of its recent takeover of Dutch nutrition group Numico.

Asked whether Danone had plans to acquire Pfizer’s €8bn Wyeth infant nutrition business, Mr Riboud declined to comment but said the company was always interested in assets that could complement its existing portfolio.

The Swiss food group Nestlé also declined to comment yesterday when asked if it had any ambitions to acquire Pfizer’s Wyeth infant nutrition business. Nestlé is scheduled to release its latest accounts later today.

Danone’s new infant nutrition processing plant at Macroom, Co Cork, led the company to increase its Irish production targets from 35,000 tonnes to more than 100,000 tonnes of formula, using considerable volumes of milk.

This move is part of the company’s global strategy, with the global baby food market growing at a faster pace than the dairy industry. This trend has attracted Danone — owner of the Bledina brand and Neocate hypoallergenic infant formula — as well as competitors such as Nestlé.

Danone also improved its operating margin by 0.2% points. Its €1.75bn net income was largely in line with projections and estimates issued by 22 analysts surveyed by press agency Bloomberg.

Speaking in Paris, Mr Riboud said: “We anticipate no improvement in the economic environment or in consumer spending in 2012. We expect the operating margin this year to be stable.”

Divisionally, Danone reported strong performances in baby nutrition (+10.7%), water (+15.7%) and medical nutrition (+9.4%). These offset a slightly weaker performance in its largest division, fresh dairy products (+4.6%).

All regions grew on a like-for-like basis during 2011, but Europe did suffer volume declines of 2% on a full-year basis. This was more than offset by double-digit growth in emerging and other markets.

Like-for-like (LFL) sales are predicted to rise by 5%-7% during the year ahead. Raw material price increases are expected to remain “strong” in the first half and at a “mid single-digit” level for the full year, the company stated. Danone said it aims to offset the higher costs partly through price increases.

Analysts with Davy Stockbrokers in Dublin described Danone’s projections for 2012 as realistic, and was encouraged that any ground lost in recession-struck Europe has been offset by a solid performance in other global markets.

Davy’s review concluded: “This is a solid statement from Danone. Although it is facing pressures in its Dairy Products business and its business in Western Europe is struggling for volume, the overall positioning of the group is offsetting these pressures. For suppliers to Danone, the guidance of LFL growth in 2012 of 5%-7% is bullish.”