French food group Danone’s share price rose 3 per cent on Wednesday after the company said demand for baby formulas in China helped boost like-for-like sales by almost 5 per cent.
A sharp rise in birth rates in China linked to the end of the one-child policy, and the growth of an affluent middle class, has boosted the company, which specialises in fresh dairy and baby food.
Danone also said its water business, which includes the Evian brand, had performed well with a 4 per cent rise in sales. But while it said its dairy operations in Europe — where it sells the likes of the Actimel probiotic drink and Activia yoghurts — were improving, sales still dropped 0.3 per cent in the first three months of the year compared to the same period a year earlier.
Much like rivals Nestlé and Unilever, Danone has been facing pressure from investors to increase revenues and profits as food groups struggle with slowing growth and changing consumer behaviours, driven by an appetite for healthier choices. To adapt to this shift, last year Danone bought WhiteWave, an organic food group based in the US.
Emmanuel Faber, Danone chief executive, said he was “very pleased with the strong results” for the first quarter.
With organic growth of almost 5 per cent, this start to the year confirms the strength of our portfolio, reflects our relentless focus on execution and delivery, and our continued investment in brands and innovations.
We have achieved further progress in developing a more sustainable platform of growth and in the premiumisation of our offering in Early Life Nutrition in China, broad-based growth in Waters, and gradual improvement in our Essential Dairy and Plant-Based activities.
By: Federica Cocco
Source: The Financial Times