Danone has this morning (25 July) booked a 12% jump in half-year profits thanks to rising sales from its core fresh dairy business and its fledgling nutrition operations.

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The French food giant posted operating income of EUR1.2bn (US$1.9bn) for the first six months of 2008, a rise of 12.3% on the year.


Revenue was up 9.6% to EUR7.7bn with Danone’s fresh dairy business seeing an identical rise in sales to EUR4.4bn. The company’s baby nutrition unit enjoyed sales growth of 17.4% to EUR1.4bn.


Fresh dairy, which accounts for over half of Danone’s turnover, was buoyed by price increases during the second quarter. On an organic basis, volume sales dipped 1.5% but sales by value jumped 10.2%. Rising sales in the UK, Russia, Turkey and North America offset challenging conditions in France.


Price increases also helped Danone offset rising milk costs at its baby nutrition business during the second quarter but the company enjoyed volume growth of 5.6% thanks to broad growth across Europe and Asia.

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Sales from Danone’s medical nutrition business climbed 13.5%, while the company’s bottled water sales rose 2.6%, as bad weather held back the unit in Europe.


Chairman and CEO Franck Riboud said Danone’s performance had led the company to up its margin target for the full year from 40 to 50 basis points.


He added: “In those markets where we have recently started to witness softeness in consumer spending, our teams have already put all the necessary wheels in motion to be able to make the necessary adjustments and accelerate innovations programmed to ensure and strengthen the competitive advantage of the group and its brands.”


Shares in Danone were up 3.84% to EUR46.57 at 10:46 CET this morning.