PARIS — Staying agile has helped Danone S.A. adapt and deliver efficiency.
“Our company is becoming more agile every day,” said Emmanuel Faber, chairman and chief executive officer. “We keep adjusting our ways of working and delivering efficiency. And we adapt to the ever-changing world around us, as exemplified by the impressive acceleration of our innovation rate, supplying a quarter of our total sales in 2018 from only 16% two years ago, and our 40% growth in e-commerce last year.
“With Specialized Nutrition, Waters and our global plant-based brands from WhiteWave continuing to post strong growth despite a very volatile environment, the year has seen the encouraging progress of our Essential Dairy and Plant-Based business in Europe, which stabilized in the fourth quarter last year. This could not have happened without the multi-faceted reinvention of Activia, which shows that after years of decline, embracing with no fear the new paradigms can turn around a large global brand.”
Net income in the year ended Dec. 31, 2018, totaled €2,440 million ($2,762 million), down 5% from €2,559 million in fiscal 2017. Net sales, meanwhile, fell to €24,651 million ($27,904 million) from €24,812 million.
Strong performance from the Activia brand contributed to good gains within Danone’s Essential Dairy and Plant-Based segment in North America during fiscal 2018. Sales grew 12% to €5,041 million ($5,706 million) from $4,492 million. Like-for-like sales growth was 1.5%, and volume growth was 2.5%.
In Waters, fiscal 2018 sales slipped 3.2% to €4,480 million from €4,630 million. Like-for-like sales growth was 5.3%, and volume growth was 2.1%. In North America, Evian sales were up more than 20%, including first acceleration benefits of the distribution agreement recently signed with Keurig Dr Pepper in the United States.
Looking ahead to fiscal 2019, Danone said it expects further cost inflation with a mid- to high-single-digit inflation in the costs of raw and packaging materials. The company said it is targeting like-for-like sales growth of 3% and recurring operating margin above 15%.
“In 2018, we delivered a solid performance and continued to successfully transform Danone for the future,” said Cecile Cabanis, chief financial officer. “Our reinforced operating model was able to absorb unexpected headwinds and deliver our guidance for the year. In 2019, we expect growth and margin to accelerate throughout the year, as the unfavorable base of comparison in the first half of the year unwinds, exiting the year at a growth rate consistent with our 2020 top-line objective. We are well on track to reach our objectives and will continue to drive positive change toward superior sustainable profitable growth.”