Zurich - Danone, the world’s biggest yoghurt maker, reported third-quarter sales that beat analysts’ estimates as Chinese consumers ordered more foreign-made infant formula and as it raised prices on fresh-dairy products.
Revenue gained 4.6 percent on a like-for-like basis, the Paris-based company said in a statement on Monday. Analysts had expected growth of 4.3 percent, according to the median of 17 estimates. Total sales reached 5.64 billion euros ($6.4 billion).
Price increases at the fresh-dairy business, which makes up more than half of Danone’s revenue, compensated for the seventh consecutive decline in shipments. Infant nutrition sales rose 11 percent, beating analyst estimates for a 7.5 percent gain. Like Swiss rival Nestle SA, Danone has increasingly been selling baby formula to consumers in that market via the Internet as they spurn locally produced brands.
“Danone is working hard to turn around its dairy business - and while a slow process - you can see a recovery,” said Jon Cox, an analyst at Kepler Cheuvreux in Zurich.
The stock rose 1.8 percent to 59.34 euros as of 9.01am in Paris.
Fresh-dairy sales rose 0.6 percent, the second gain in four quarters, while volume declined 3.3 percent. Lower milk prices are making yoghurt production more profitable, and that may continue through 2016 because of weak demand in China and Russia, according to Bloomberg Intelligence analysts Diana Gomes and Deborah Aitken.
The yoghurt maker reiterated its forecast for a 2015 like-for-like revenue increase of 4 percent to 5 percent, combined with slight improvement in the operating margin. Last week, competitor Nestle lowered its sales outlook for 2015 amid weak demand in China, while Unilever said its full year-sales growth will be near the top end of its forecast.
While the European infant formula business has been getting a boost from Chinese orders, that will weaken in the fourth quarter as year-on-year comparisons become harder, Danone said.
Bottled water sales rose 6.8 percent, Danone said. The Chinese non-alcoholic beverage market is slowing and the French company said it’s preparing for lower growth of its flavoured Mizone brand in that market.
BLOOMBERG