PARIS (dpa-AFX) - French diary giant Danone SA (DANOY.PK) Wednesday reported a 5.2 percent decline in the first-quarter sales, reflecting unfavorable foreign exchange effects. Sales, however, showed an organic growth of 2.2 percent. The company also backed its full-year 2014 outlook.
The Group said growth remains strong in the CIS & North America area, and confirmed stabilization of its European business.
For the first quarter, the company posted sales of 5.06 billion euros, lower than 5.34 billion euros in the previous year.
Excluding impact of changes in the basis for comparison, that include exchange rates and scope of consolidation, sales grew 2.2 percent. According to the firm, this organic growth reflected 1.9 percent decline in sales volume and a 4.1 percent improvement in value.
The exchange-rate effect of a negative 8.9 percent reflected unfavorable trends in the Argentine peso, the Russian ruble, the Indonesian rupiah, the Brazilian real and other currencies.
Danone Chairman Franck Riboud said, 'We delivered first-quarter organic sales growth in line with our roadmap.'
Sales for Fresh Dairy Products unit increased 3.9 percent in the quarter, including a 3.7 percent fall in volume and a 7.6 percent growth in value. Comparisons are on a like-for-like basis.
In the Waters division, sales climbed 8.9 percent, helped by 5.4 percent rise in sales volume. The performance was driven by strong demand in emerging markets, particularly in Asia, with growth for Mizone brand and Aqua, Danone noted.
Meanwhile, Early Life Nutrition unit sales fell 7.7 percent. Volumes were down 4.8 percent, reflecting high bases for comparison linked to false safety alert triggered by Fonterra in August 2013.
In August last year, New Zealand-based dairy exporter Fonterra warned that batches of ingredients supplied by the company to four Danone plants in Asia-Pacific might be contaminated with Clostridium botulinum bacteria.
The warning was lifted on August 28 when New Zealand's Ministry for Primary Industries concluded that there was no Clostridium botulinum in any of the batches concerned. On January 8, 2014, Danone announced termination of its existing supply contract with Fonterra.
Medical Nutrition's sales were up 5.2 percent, driven by volume growth of 4.3 percent.
Geographically, sales from Europe excluding CIS, edged up 0.5 percent, while CIS & North America sales climbed 7.8 percent from last year. ALMA, or Asia-Pacific / Latin America / Middle East / Africa sales were up 0.5 percent.
For full year 2014, the group still sees like-for-like sales growth in the range of 4.5 to 5.5 percent, while expecting trading operating margin to be stable within a range of -20 basis points and +20 basis points.
In Paris, the shares are currently trading at 52.45 euros, down 1.56 percent, on a volume of 567,639 shares.
Copyright RTT News/dpa-AFX