Danone SA, the largest yoghurt manufacturer in the world, made an official statement today, announcing a 5.2% decline in its sales during the first quarter of the current financial year. The results are due to foreign-exchange movements in some of the companys key emerging markets. Over the last couple of years, the company has been going through hard time in some major regions such as South Europe and China.
As reported by Bloomberg, the company said in its statement: “Demand will remain similar to 2013, with sluggish trends in Europe, significant carry-over of milk price inflation and persistently high exchange-rate volatility in emerging markets, resulting in higher inflation in those countries.”
Pierre-André Terisse, who is the Chief Financial Officer of Danone SA, said on a conference call, which was cited by the Wall Street Journal: “The environment remains very volatile and the economic context hasnt become easier in the first quarter.”
The revenue growth posted by the company matched the analysts estimates, but was lower, compared to the same period a year ago. However, Danone SA kept its projection for 2014, forecasting the like-for-like sales, excluding acquisitions, divestments and currency shifts will increase between 4.5% and 5.5% in 2014.
According to the companys statement, the first-quarter sales of Danone SA decreased to 5.06 billion euros (6.00 billion dollars) in the first three months of 2014 from 5.34 billion euros in the same period a year ago.
Currently, the company is focusing especially on bringing back the previous success of its Chinese infant-nutrition division after facing its major supplier Fonterras requirement to recall an infant formula across eight Asian markets in 2013. Earlier in 2014 Danone SA made an effort to bring back its customers trust by shifting its infant formula brands in China.
One of the analysts working for RBC Europe – Mr. James Edwardes Jones commented on the companys results in a report to investors, which was cited by Bloomberg: “By Danone’s recent standards, the first quarter was a refreshingly dull quarter.”
Danone SA was trading at 52.65 euros per share at 11:14 GMT, losing 1.16% for the day and marking a -5.44% one-year change. The 29 analysts offering 12-month price targets for Danone SA have a median target of 52.00, with a high estimate of 67.00 and a low estimate of 45.00. The median estimate represents a -2.38% decrease from the last price of 53.27.
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