- Prev
- Next
A solid performance from Danone in 2008 in a complex climate
What do you have to say about 2008 for Danone ? Interview of April 2009
Franck Riboud: Even before the end of the year, everyone, especially on the financial markets, had shifted their focus to 2009. But I think it’s worth taking a closer look at 2008. There are some important lessons to be drawn for the near future, in particular at Danone.
The first point is that we achieved our targets once again, with organic sales growth reaching 8.4%*, margin up 53 basis points*, and earnings per share up 15.1%**.Of course that partly reflects our record 9.6%* sales growth for the first six months of the year, but I think we can learn more from developments in the second half.
The economic crisis took hold everywhere during the summer of 2008, but our key business indicators held on a firm track trough to the end of the year. Growth in the fourth quarter, when the economic environment was very unsettled, was still a very sound 6%*. Which doesn’t mean that Danone is imune from recession, but it does demonstrate the real solidity of our business. We have built that up over the years, drawing on our key resources: the strengh of our brands, our consistebt strategy, business lines and geographical balance. The results also showw that our staff members have lost none of their agility and commitment-which is what really counts in the current context.
It looks like Numico also made an important contribution to the quality of results.
FR: That’s the second lesson I want to draw: that the acquisition of Numico’s baby nutrition and medical nutrition businesses was the right strategic choice for Danone. The results are there, in terms of sales growth, margin and synergies-cost synergies will be even higher than the €45 million we expected in 2008 and the €15 million forecast for 2009. Most importantly, the results are there in terms of the successful integration and high level of staff motivation, with teams on both sides doing an outstanding job. That’s something we can be proud of. The results confirm the promise of our two new global businesses, but they also show that we’ve avoided getting in the way of growth, and have provided new momentum though the integration process. Integrating a new subsidiary is always risky, but in this case I think we can safely say it has gone very smoothly and efficiently.
The new Danone has four business lines. How did they perform individually?
FR: The most impressive performance has come from the two new businesses just mentioned, with organic growth, reaching 17%* for Baby Nutrition and almost 13%* for Medical Nutrition. But at the heart of our group, Fresh Dairy Products turn in another robust performance with sales up nearly 8%*, to top €8 billion. This division is our real powerhouse, making an unmatched volume contribution of €400 million to growth. Water sales were up 1.9%*, an overall figure that combines results from two very different worlds. On the one hand we have four large and mature markets-France, Spain, the UK and Japan-where sales of bottled water have declined fairly markedly, but our own market shares are holding up well, even rising. Then there is the rest of the world, which already accounts for over half of our sales and where we are seeing double-digit growth. Examples are Argentina, Indonesia, China and Mexico, which is set to become our largest single market for water within four or five years.
