Shares in Danone have climbed more than 4% in early trade Tuesday after the dairy group announced restructuring plans as well as reporting a 5.4% increase in sales revenue last year, exceeding E20 billion for the first time in the company's history.

The French-based group, the world's biggest yoghurt maker, reported full-year sales totalling E20.9 billion, helped in part by strong fourth quarter results, as sales increased 4.9% over the October to December period.

"2012 was an important year for Danone in many respects. Important in that we achieved some major milestones," commented Franck Riboud, Chairman and Chief Executive Officer of Danone.

"Our sales exceeded the E20 billion mark for the first time....and for the first time, too, our cash-flow topped E2 billion—double the 2008 figure," added Riboud.

European restructure

However Mr Riboud warned 2013 was a "year of transition, with vigorous development in business in our growth markets and a drive to strengthen operations in Europe."

Much of the sales growth witnessed in 2012 was attributed to operation outside of Europe, according to the group's results.  Sales in Asia increased by 17.4% while those in Europe contracted by 1%.  The lower sales, particularly in Southern Europe, 'cut significantly into Group profitability'.

In particular Danone aim to win back its "competitive edge and achieve greater efficiency" after sales in Europe suffered a "severe deterioration" in consumer demand.

In December the company announced it was preparing a two-year cost-cutting programme to save around E200 million.

The first stage of its restructuring will see the company shed some 900 management and administrative positions across 26 European countries, which Danone believe will 'boost responsiveness and speed up decision-making'.

"pursue lasting expansion"

Despite the reorganisation Danone will continue to "make every effort to pursue lasting expansion" in growth markets, particularly Asia. Danone reported a 10% increase in sales and Research & Development expenditure last year

Danone are targeting like-for-like sales growth of at least 5% this year in addition to reducing its operating margin, while the company expect raw material and packaging costs to remain high.

Shares in the group were trading at E52.39 per share at midday Paris time, up 4.3% from Monday's close.


 

agrimoney