Danone boost on China baby formula

Danone’s sales of baby milk formula in China rose strongly in the third quarter, beating forecasts and sending the French food company’s shares to a record high. 

The company published its strong sales figures as Le Monde reported that chairman Franck Riboud is to stand down and hand over to chief executive Emmanuel Faber who will become CEO and chairman.

The company is the latest consumer goods group to come under investor pressure to improve results and it needs to deliver on a profit margin target it recently set.

Mr Riboud handed the CEO role to Mr Faber in 2014 to prepare his succession at a time when Danone was facing criticism from US activist investor Nelson Pelz.

Danone is facing fierce competition in the China baby food market from Nestle and Reckitt Benckiser, but said it was gaining share in the country.

Nestle is the global market leader in infant formula, and CEO Ulf Mark Schneider recently identified infant nutrition as one of the company’s key areas. Reckitt Benckiser recently jumped into the business by buying Enfamil maker Mead Johnson. Strong Danone sales in China contributed to a 4.7% rise in underlying third-quarter, like-for-like sales.

Its dairy business was hit by a relatively unsuccessful Activia relaunch in Europe, while in China its baby food and waters businesses have had regulatory issues.

However, Danone, also the world’s largest yoghurt maker with Actimel and Activia said challenging conditions had hit its dairy business in Brazil, where sales fell by a double-digit rate.



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