Danone raised its forecast for 2017 profit growth after the $10 billion takeover of WhiteWave Foods Co., providing a boost for the world’s largest yogurt maker after the weakest first-quarter revenue increase in at least a decade.
Recurring earnings per share will rise at a double-digit pace at constant exchange rates, the Paris-based company said Thursday after European markets closed. In February, it predicted growth of more than 5 percent.
The revised forecast reflects the company’s increased confidence in generating growth from the purchase of WhiteWave, which it completed last week to become a world leader in organic food and drinks. Danone now expects “strong” earnings accretion from the deal this year, having previously seen a “solid” gain.
The company also said it anticipates “moderate” 2017 like- for-like sales growth including WhiteWave, the first time it has provided such an indication.
The increased forecast caps a good day for European makers of consumer staples after Nestle SA and Unilever reported sales that beat analysts’ estimates, pushing their shares higher.
Like its larger peers, Danone was helped by stronger pricing in the first quarter, offsetting weaker-than-expected volume. Sales climbed 0.7 percent from a year earlier on a like- for-like basis, meeting estimates. Volume slipped 2.6 percent, the third consecutive quarterly drop.
Chief Executive Officer Emmanuel Faber has been struggling to revive sales at the fresh dairy unit, which generates about half of total sales. The revamp of its Activia yogurt brand has been proceeding more slowly than expected, following three years of negative dairy volumes.
“Sales are showing a slow start to the year,” Faber said in a statement. The fresh dairy unit “sequentially impacted our performance.”
Source: Bloomberg
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