Danone bullish despite sales drop

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Danone, the company behind the LU biscuit brand, reports a downturn
in sales for 2002, but stresses underlying growth.

Both sales and operating profits at French dairy products, bottled water and biscuit group Danone fell in 2002, largely due to the effect of currency exchange rates and consolidation changes.

The company, which produces Danone yoghurts, Evian bottled water and LU biscuits, said that sales for the year were down 6.3 per cent in actual terms to €13.6 billion, but stressed that like-for-like sales showed an encouraging 6 per cent increase. Operating profits, however, slipped from €1.61 billion to €1.59 billion as a result of the drop in sales.

Net profits before exceptional items were ahead 6.2 per cent to €828 million, while a one-off gain of €458 million, related mainly to the sale of the Kronenbourg beer unit to Scottish & Newcastle and the changes to its US water business following an agreement with Coca-Cola, helped push the final net figure up to €1.3 billion.

On a like-for-like basis, all three of Danone's core operations showed solid growth during the year. Fresh dairy product sales increased by 9.4 per cent to €6.3 billion, while the beverages arm lifted its turnover by 4.3 per cent to €3.7 billion. Biscuit and cereal product sales increased 2.4 per cent to €3.2 billion. Sales from Danone's non-core operations (principally the UK sauces business of Lea & Perrins, HP and Amoy) fell by 1.4 per cent to €356 million.

In geographical terms, sales rose by 5.9 per cent in France to €4.2 billion, while the rest of western Europe also showed an increase, of 5.5 per cent to €4.6 billion, on a like-for-like basis. Sales to the rest of the world increased by 6.4 per cent to €5.6 per cent.

Operating profits for the dairy business were up to €802 million for the year, from €790 million in 2001, while the beverages unit lifted its operating profits from €432 million to €464 million. Operating profits in the biscuit business crept up from €316 million to €317 million. But it was the one-off impact of €54 million which pushed the overall operating profit figures down by 6 per cent.

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