Danone Sales Dented by Stronger Euro

PARIS—French dairy maker Danone SA said Tuesday that first-quarter sales dropped 3% as the strengthening euro curbed revenue in emerging markets.

Danone, which manufactures Activia yogurt and Evian water, said sales fell to €5.3 billion ($5.98 billion) from €5.5 billion in the first three months of the year, in line with analyst estimates according to a company-compiled consensus.

Stripping out currency shifts, acquisitions and disposals, sales rose 3.5%, in line with the company's full-year sales target as the company's four business units posted growth.

The trading update to the year comes as food giants wrestle with slower economic growth in many markets and changing consumer preferences. Nestlé SA last week reported its slowest first quarter growth rate since 2009, although its organic growth came in slightly ahead of analysts' expectations. Unilever PLC, the maker of Ben & Jerry's ice cream, said its foods business remained a relative laggard, with sales growing by just 1.9%.

Danone Chief Executive Emmanuel Faber, who took the reins of the company in October 2014, has vowed to deliver "strong, profitable and sustainable growth" by 2020, reviewing its business in China and restructuring its fresh dairy unit where he has cut costs and focused on its most popular brands.

Fresh dairy sales, which account for about half of group revenue, rose 2.3% to €2.7 billion on a like-for-like basis compared with the same period last year. First-quarter revenue at its water division, which includes the Evian brand, increased 3.9% on a like-for-like basis to €1 billion.

Meanwhile, the group's early-life nutrition business posted revenue of €1.2 billion—4.8% above the first quarter last year on a like-for-like basis.

Danone, which doesn't report profit at the three month stage, confirmed its full-year targets but again warned that the economic backdrop will remain difficult this year. Danone said rising raw material costs would also likely continue to weigh on sales growth throughout 2016.

Write to Nick Kostov at [e-mail]

(END) Dow Jones Newswires

April 19, 2016 02:05 ET (06:05 GMT)

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