Danone to slash costs as sales growth slows
French dairy giant Danone unveiled a one-billion-euro ($1.1-billion) cost-cutting program yesterday as it said that sales growth slowed last year. Danone said in a statement that although it turned in a “robust” performance last year, it needed to improve costs in order to face up to the current challenges. “While we delivered a robust performance... the challenges we faced, including a slower turnaround of dairy in Europe and major market volatility, are a clear case to step up in our ability to seize consumer opportunities and improve our efficiency,” said chief executive Emmanuel Faber.
Danone said its net profit jumped by 34 percent to 1.7 billion euros ($1.8 billion) in 2016, but sales declined by 2.1 percent to 21.9 billion euros, largely due to exchange rate effects.
On a like-for-like basis, sales grew by 2.9 percent, slower than the rate of 4.4 percent recorded the previous year. Looking ahead, Danone said it expected economic conditions to “remain particularly volatile and uncertain overall, with persistently fragile or even deflationary consumer trends in Europe, and specific contextual difficulties in a few major markets,” including Russia, China and Brazil.
In the face of this, it would embark on a program to cut selling and administrative costs by one billion euros by 2020, and lift operating margins, Danone said. Danone is in the process of acquiring the US organic foods producer WhiteWave Foods. — AFP