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Chinese thirst for baby formula boosts Danone sales

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(Globalpost/GlobalPost)

French food group Danone said Tuesday the explosion in demand for baby formula in China helped lift sales by 4.3 percent in the first quarter of the year to 5.3 billion euros ($6.9 bn).

"As we expected, the first quarter of 2013 saw a solid performance that highlighted once again the contrast between robust growth in emerging markets and the sluggish economy in Europe," Danone chief executive Franck Riboud said in a statement.

Sales in emerging markets and North America grew by over 10 percent, but European sales slumped by over 5 percent.

"In Asia growth reached record highs, particularly in Baby Nutrition" which grew by 17.1 percent worldwide.

Imported baby formula is popular with Chinese families because of concerns about the safety of food processed in China after a series of scandals, notably in 2008 when six babies died from drinking milk tainted with the chemical melamine.

"The demand in Asia and particularly in China was very strong for local brands" which "we are in the process of reinforcing," said Financial Director Pierre-Andre Terisse in a conference call.

Meanwhile in Europe the company is in the process of changing its portfolio and costs to adapt to the 5.3 percent slide in eurozone sales, he added.

The company however confirmed its 2013 full year target of sales growth of at five percent, with operating margin of down 0.3 and 0.5 percentage points from 14.18 percent in 2012.

Danone's shares jumped 3.53 percent to 56.41 euros after 10 minutes of trading while the Paris market had slid 0.11 percent overall.

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http://www.globalpost.com/dispatch/news/afp/130416/chinese-thirst-baby-formula-boosts-danone-sales