Danone has reported 6.9% organic growth in the third quarter of 2014, reflecting trends across all businesses, underpinned by a favorable basis for comparison in early life nutrition.
The group is continuing to follow the roadmap set out at the beginning of the year — adapting its portfolio and structures in Europe, building and enhancing the value of fresh dairy products markets in the US and Russia, and rebuilding early life nutrition sales in China.
The fresh dairy products division sales were up +0.7% like-for-like, which reflects a 7.1% fall in sales volume offset by a steep 7.8% rise in value.
Business in Europe was on the whole in line with trends observed in the second quarter, with sales down by around 5%.
This reflects a continued decline in sales volumes, due partly to overall market trends but also to the division’s more selective approach to promotions and streamlining of some product lines.
Together these initiatives, which have been rolled out gradually since the beginning of the year, are aimed at stabilizing margins in Europe by the second half of 2014.
In Russia, growth remains buoyed by continued portfolio enhancement through higher prices and a very positive mix effect; low value-added segments have continued to decline in volume, affecting sales in both the geographical area and the division.
In the US, the category is leveling off after several years of strong dynamics, particularly in Greek yogurt.
The early life nutrition division saw sales rise 19.2% in the third quarter, driven by 9.9% volume growth.
This performance was buoyed by very favorable bases for comparison across all eight Asian markets affected by Fonterra’s false alert starting in August 2013, with sales in most of these markets now back to pre-crisis levels.
In China, the market that was hardest hit, group brands as a whole continued to grow broadly in line with expectations.
Demand for Nutrilon products rose sharply, particularly in ultra-premium segments and specialized distribution (such as mom and baby stores).
The e-commerce boom has been another driver, with a significant impact on Chinese consumer trends, while sales of Dumex brand products continue to lag projections.
In Europe, Q3 sales showed double-digit growth underpinned by Aptamil and Nutrilon products and helped by a stabilization in weaning food products, particularly in France and Italy.
Division activities in the rest of the world remained very robust, with double-digit growth in Latin America, Russia and Africa/Middle East.
