Danone SA warned on Friday that another tough year lies ahead and projected no gain in sales growth after in 2014 its fresh-dairy division reported the smallest increase in revenue in more than ten years.
According to Danones statement, the companys sales are expected to increase in the range from 4% to 5% on a like-for-like basis in 2015, compared to analysts projections of 5.6%. In comparison, they grew by 4.7% in 2014. Citi Research called the outlook “disappointing”.
The newly-appointed Chief Executive Officer of the company – Mr. Emmanuel Faber said in a statement: “We’re not satisfied with where we are in Europe. We need to get back to growth and that is on the agenda for 2015.”
The yoghurt maker also projected only “slight growth” in its operating margin on the same basis, although this would be the first margin growth in almost half a decade.
The worlds biggest dairy products maker has been trying to overcome multiple setbacks, which have negatively affected its earnings and revenue in recent years, including the economic crisis in Europe, volatile emerging market currencies and geopolitical tension in Ukraine.
In addition, Danone shared that the economic conditions are expected to remain difficult. The company also projected that negative currency effects will continue to hurt its performance in emerging markets.
One of the analysts, who work at Societe Generale – Warren Ackerman – commented on the companys projection in a note that was cited by Bloomberg: “The main disappointment is 2015 guidance. Dairy still remains very concerning with volumes actually getting worse in the fourth quarter despite the high level of pricing starting to come off.”
The French companys profit margin forecast was made after Danone reported a 21% decline in its annual net profit to €1.12 billion last year from €1.42 billion in 2013, while annual revenue fell as well, from €21.3 billion to €21.14 billion, due to foreign exchange flotations.
Danone SA rose 1.44% on Friday in Paris to close at €60.00 per share, marking a one-year change of +16.05%. The company is valued at €38.08 billion. According to the Financial Times, the 26 analysts offering 12-month price targets for Danone SA have a median target of €58.75, with a high estimate of €68.00 and a low estimate of €45.00. The median estimate represents a -2.08% decrease from the last price of €60.00.
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