Danone Reports 6.9 Percent Fourth Quarter And Full Year Sales Gain

The rise in sales price per kilo in the fourth quarter marks the end of the impact of the Reset program and a return to competitive management of the product portfolio and prices. Growth in sales value was affected by price rises in high-inflation countries (Argentina, Ukraine and Turkey), as well as Russia, where price increases were applied in line with overall market trends and also in response to an exceptional surge in milk prices due notably to adverse weather conditions in summer 2010.

The division's priority markets, among them the U.S., Russia and Brazil, continue to drive growth, while Activia is the division's most dynamic product, accounting for half of overall growth.

The waters division posted a 5.2 percent like-for-like rise in sales in the fourth quarter of 2010, in line with average growth over the year. A robust 7.3 percent rise in volumes confirms trends over the past six quarters, with continued double-digit growth in emerging markets and steadying volumes in mature economies, where France and German were top performers.

The baby nutrition division turned in its best quarterly performance of the year, with sales up 9.8 percent like-for-like and volume growth reaching 6.4 percent. A 3.4 percent rise in value reflects a favorable geographical mix and price increases for infant milk in China, in line with market trends. All regions reported growth, with China, Indonesia and the United Kingdom still the main contributors. The milks category continued to deliver double-digit growth, while weaning foods saw a slight rise in the fourth quarter reflecting good performances in France, Poland and Russia.

Medical nutrition reported a 7.7 percent like-for-like sales growth in the fourth quarter of 2010, entirely attributable to a rise in volumes (8.4 percent). Once again all regions contributed to growth, with Western Europe and new geographies contributing equally. All product categories gained ground, with pediatrics and the gastro-intestinal allergy range again showing above-average growth.

Backed by steady growth at the end of the year, Danone is moving into 2011 with confidence. It expects 2010 trends to continue in the months ahead:

• consumer spending in both the industrialized world and emerging economies shows no sign of either significant improvement or worsening;
• raw material prices remain on a volatile upward path.

More specifically, in view of developments since the beginning of 2011, the group expects total raw material and packaging costs to increase by 6 to 9 percent on average over the year, with a steeper increase in the first half reflecting the comparison with figures recorded in 2010.

Danone will be drawing on its experience of 2010 to manage these increases through consistently high productivity. The group will also continue to use pricing to maintain competitive edge, benefiting from increased room for maneuver thanks to repositioning in 2009.

Another priority for 2011 will be the integration of Unimilk's operations in Russia and CIS countries, with sales and cost synergies set to boost Unimilk's operating margin from the second half on.