French dairy and nutrition giant Danone saw profits more than triple last year thanks to growth from its dairy division and a one-off gain from the sale of a biscuits business.
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The company said today (14 February) that net income rose to EUR4.2bn (US$6.1bn) last year, up from EUR1.4bn in 2006.
Danone sold the biscuit unit to Kraft Foods for around EUR5.3bn in November as part of a strategy to focus healthier products.
Last year, Danone also bought Dutch nutrition business Royal Numico in a deal worth EUR12.3bn. CEO Franck Riboud said the two transactions had formed part of a “historic year” for the business.
Danone’s underlying sales rose 9.7% to EUR12.1bn, as the company saw revenue from its fresh dairy business climb 12.2%. The company said it had managed to pass on higher input costs with price increases on a portfolio including Activia and Actimel.
The company saw its water sales rise 4% as poor weather in Western Europe dampened sales. Danone’s ongoing dispute with Chinese water venture partner Wahaha also hindered sales.
Danone admitted that sales from its new Numico unit were impacted by bringing stock levels in line with the company’s strategy but insisted the underlying growth of the business was sound.
Riboud said he was confident Danone would see its growth accelerate in the year ahead. “As a consequence, we are increasing our growth targets for 2008 and beyond,” he said.
Danone has set a target of like-for-like sales growth of 8-10%, with operating profit exceeding sales growth by at least 30 basis points in 2008.
