Groupe Danone operating income up 12%

by Eric Schroeder
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PARIS — Trading operating income at Groupe Danone rose 12% in fiscal 2007 to €2,046 million ($2,994 million), boosted by strong growth in the company’s fresh dairy products and water divisions.

For the full year, Groupe Danone sales rose 7.2% to €14,579 million ($21,337 million), which included marked like-for-like sales gains over the previous year of 12.2% for fresh dairy and 4% for water.

Within fresh dairy, the company said its four major brands — Activia, Actimel, Taillefine/Vitalinea and Petit Gervais/Danonino — grew at a close to 20% clip during the year.

"This growth was supported by an improved product mix and by price increases resulting from significant increases in milk costs," Groupe Danone said. "Growth in France was in the mid-single digits, while the rest of Europe’s growth was in the teens. Eastern Europe, Latin America and North America also recorded strong growth."

In November, Groupe Danone completed the sale of its biscuits and cereal products unit, which resulted in a gain on disposal of €3,105 million.

"Two-thousand-and-seven was a historic year for Danone; a year of strategic decisions that reinforce our leadership position in healthy food," said Franck Riboud, chairman and chief executive officer. "It was also a year of remarkable profitable growth. Despite strong headwinds, Danone had again reached its ambitious targets thanks to the highest ever growth rate in the Fresh Dairy division and a very strong fourth quarter in the Water division.

"The underlying strength of the business, coupled with the smooth integration of our Numico business, gives me particular confidence in the Group’s ability to accelerate its growth profile even further."

In line with its optimistic look for 2008, Groupe Danone raised its like-for-like sales growth target to between 8% and 10%, up from 6% to 8% targeted in 2007.

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