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Danone Backs Full Year Goals After Baby Nutrition Sales Surge

7/29/2013 3:35 AM ET

Danone SA (DANOY.PK) Monday reported higher profit for the first half of the year, amid a 6 percent growth in revenues with strong growth in Baby Nutrition sales. The French dairy firm backed its full year goals.

Net income - group share for the owner of Evian bottled water climbed to 972 million euros ($1.29 billion) from 881 million euros.

Underlying net income-group share was 873 million euros while it totaled 911 million euros in the prior year.

Sales for the period advanced 5.6 percent to 11.058 billion euros from 10.475 billion euros and like-for-like rose 6 percent.

Segment-wise, Fresh Dairy Products sales grew 2 percent to 6.023 billion euros and were 1.7 percent higher on a like-for-like basis.

In Waters, sales climbed 7.4 percent to 1.991 billion euros and like-for-like sales jumped 9.6 percent.

Baby Nutrition sales increased 14 percent to 2.383 billion euros. The segment's like-for-like sales improved 15.2 percent.

Geographically, sales improved in CIS & North America as well as Asia-Pacific / Latin America / Middle East / Africa, but declined in Europe excluding CIS.

Trading operating margin for the first half of the year declined to 13.34 percent from 13.85 percent.

For the second quarter, sales grew to 6.7 percent to 5.720 billion euros from 5.359 billion euros. Organic growth was 6.5 percent, reflecting a 4.1 percent increase in sales volume and a 2.4 percent increase due to the price/mix effect.

The Baby Nutrition division reported like-for-like rise of 13.5 percent in the quarter, with strong sales in the Asia-Pacific region, particularly in China and Hong Kong. Europe continued to benefit from indirect demand for international baby formula brands in some emerging countries.

Like-for-like sales growth for the Waters division in the quarter was 10.5 percent, driven by vigorous growth in emerging countries, particularly in Asia.

Further, Danone confirmed its targets for 2013. The company still sees a like-for-like sales growth of at least 5 percent and a trading operating margin decline of between 50 and 30 basis points like-for-like.

Franck Riboud, CEO, said, "With sales up 6% in the first half, Danone is off to a strong start in 2013 in an economic and consumption context that remains difficult in Europe and in some cases volatile in emerging countries. This performance demonstrates the relevance of our action plans...''

The stock is up 2.8 percent in early morning trade at 59.07 euros.

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by RTT Staff Writer

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