Danone FY14 Profit Down

23-Feb-2015 - France

French dairy giant Danone SA (DANOY.PK) reported Friday a decline in its profit for fiscal 2014, reflecting lower margin and weak sales. On like-for -like basis, sales increased

4.7 percent, reflecting a 6.2 percent increase in value, despite a decline in sales volume. The stock is losing around 2 percent in the morning trading in Paris.

Looking ahead, for fiscal 2015, the company projects organic growth in net sales of between 4 percent and 5 percent on a like-for-like basis, and slight growth in trading operating margin.

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For fiscal 2014, net income attributable to the group was 1.12 billion euros, lower than last year's 1.42 billion euros.

Underlying net income group share, which excluded certain items, was 1.56 billion euros or 2.62 euros per share, compared to 1. 64 billion euros or 2.78 euros per share last year.

Net sales were 21.14 billion euros, down 0.7 percent from last year's 21.30 billion euros.

For the fourth quarter, net sales grew 5.6 percent year-over-year to 5.26 billion euros. On a like-for-like basis, quarterly sales grew 7.5 percent, despite a 0.3 percent drop in volume. The results reflected strong sales growth in Early Life Nutrition, waters and medical nutrition segments, despite weak fresh dairy products' sales.

Full-year trading operating income dropped to 2.66 billion euros from last year's 2.81 billion euros. Trading operating margin was 12.59 percent, down from 13.19 percent a year ago.

The company noted that the consequences of the false alert on quality triggered by Fonterra in August 2013 and the decline in sales of Dumex brand products in China in particular continued to undermine its growth and profitability in 2014.

In addition, a very steep rise in the cost of milk and dairy ingredients was offset by solid growth trends, by selective and competitive price increases, by optimization of the mix, and, by additional efforts to reduce costs, the company said.

Further, the company proposed a 3.4 percent increase dividend to 1.50 euros per share.

For fiscal 2015, Danone said it assumes that economic conditions will remain difficult and unstable overall, with fragile or even deflationary consumer trends in Europe, emerging markets undermined by volatile currencies, and difficulties specific to a few major markets, in particular the CIS.

Danone also anticipates lower prices in Europe and the United States in the first half, with a rebound likely in the second half of the year, and gradual price increases in emerging countries all year long.

Altogether, Danone expects a moderate rise in the cost of main raw materials and packaging in 2015.

In Paris, Danone shares were losing 2.08 percent in the early morning trading at 57.92 euros. (dpa)

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