- Solid growth in H1 2012 sales of +7.7 percent as reported and +5.9 percent like-for-like
- Second quarter in line with expectations, marked by a high basis for comparison in 2011 in the Waters division; reported sales up +7.8 percent and like-for-like salesup +5.0 percent
- Sales up in all divisions, with variations from one region to the next including a decline in Europe and double-digit growth in the rest of the world
- Trading operating margin in line with expectations at 13.85 percent (-61bps)
- Underlying fully diluted earnings per share up +4.7 percent at €1.51 as reported, and up +2.5 percent like-for-like
- Free cash flow at €890 million
- New full-year targets for 2012 confirmed: sales growth of 5-7 percent, operating margin down 50 bps, and free cash flow at €2 billion.
''The consumer environment definitely got tougher in Europe, particularly Southern Europe, in the first half of this year. At Danone, we moved quickly to manage this new situation in line with our strategic priorities: strengthening our brands and pursuing sustainable, profitable growth.
Our first-half organic growth in sales stands at nearly 6 percent, in line with our full-year objectives. In the United States and Russia, our Oikos and Prostokvashino brands are continuing to expand rapidly. In emerging markets, we are continuing to grow at a very brisk pace and are expanding our presence, as we did recently in Morocco and India. Finally, everywhere we operate we are innovating to offer consumers new experiences, adapted to their expectations; examples include Yolado in Spain and the renovation of Dumex in China. These initiatives and results testify to the commitment and determination of our Group and our teams. And they allow me to move into the second half with confidence.''
Overview of sales performance – H1 2012
Consolidated sales increased +7.7 percent to €10,475 million in the first half of 2012. Excluding the impact of changes in the basis for comparison, which include exchange rates and scope of consolidation, sales were up +5.9 percent. This organic growth reflects a +2.2 percent increase in sales volume and a +3.7 percent increase due to the price/mix effect.
Exchange-rate effects of +2.0 percent reflect favorable trends in currencies including the US dollar and the Chinese yuan, primarily from the second quarter on.
Overview of sales performance – Q2 2012
Consolidated sales increased +7.8 percent to €5,359 million in the second quarter of 2012. Excluding the impact of changes in the basis for comparison, including changes in exchange rates and scope of consolidation, sales were up +5.0 percent. This organic growth reflects a +2.1 percent increase in sales volume and a +2.9 percent increase due to the price/mix effect.
The +2.8 percent exchange-rate effect reflects favorable trends in currencies including the Chinese yuan and the US dollar.
Fresh Dairy Products
Fresh Dairy Products division sales increased by +2.1 percent like-for-like in the second quarter of 2012, reflecting a slight -0.3 percent decline in volume and a +2.4 percent increase in value.
The price/mix effect declined from the first quarter as the impact of price increases introduced in the first part of 2011 tapered off in most countries.
Sales in Europe were down this quarter, affected by a rapid deterioration in consumer demand in Southern Europe, particularly Spain.
Sales in Latin America and the Africa-Middle East region remained extremely robust with continued double-digit growth.
The CIS region and North America are on track for their plans and second-quarter sales were up once again in both volume and value.
The CIS confirmed its return to a growth model built on balanced gains in volume and value. Volume growth continues to expand whereas the impact of price increases introduced in early 2011 faded. Initiatives aimed at activating key Unimilk brands are producing the expected results. Children's brands and Bio Balance reported double-digit growth in the first half of 2012, as did Prostokvashino, which remains the top contributor to growth.
In the United States, the Oikos brand continued to win market share in the very fast-growing Greek yogurt segment, strengthening Danone's leading position in fresh dairy products overall. The Group is heading into the second half of 2012 with additional production capacity and ambitious plans for innovation.
The Waters division reported a +4.6 percent like-for-like increase in sales in the second quarter of 2012, driven by a +3.1 percent increase in sales volumes and a +1.5 percent increase due to the price/mix effect.
Both volumes and mix were adversely affected by the high basis of comparison established in Q2 2011, when demand was boosted by the earthquake in Japan as well as very favorable weather in Western Europe and Latin America. In contrast, Western Europe experienced poor weather in the second quarter of the current year. The division's structural trends nonetheless remain solid, with double-digit growth in emerging markets.
Growth in value continues to benefit from the positive price/mix effect of aquadrinks, as well as past price increases in emerging countries, starting in the second quarter of 2011, even though the impact is starting to taper off.
The Baby Nutrition division reported excellent growth with sales up 13.6 percent like-for-like in the second quarter of 2012. Business is led by a very strong performance in Asia, particularly China, where Danone's market share increased this quarter. The Group also benefited from a build-up of inventories prior to the renovation of the Dumex line scheduled for July. This sales growth comprises +7.0 percent growth in volume and +6.6 percent growth in value.
The growing-up milk segment reported double-digit growth once again, while weaning foods continued to decrease.
Strong growth in value shows a balanced distribution between the favorable growth mix by product and geographical market on the one hand, and the impact of price increases on the other.
All regions are up; with Asia, the Middle East, Turkey and the United Kingdom remaining the division's prime drivers.
Medical Nutrition sales increased +6.7 percent like-for-like in the second quarter of 2012, driven by volume growth (+7.1 percent).
As in the previous quarter, main contributors are China, Brazil, Turkey, the United Kingdom and the Netherlands. Market conditions nonetheless remain tough in Southern Europe and North America.
All product categories gained ground, with pediatric care including the Neocate and Nutrini brands and the division as a whole once again showing above-average growth.