Danone (EPA:BN) profits surged despite weakness in its core dairy segment

Thursday July, 27 2017 Paris-based Danone (EPA:BN) announced its quarterly earnings results with a surge in profit, citing strong revenue growth in baby food and medical nutrition make up for weakness in its core dairy activities, which comprise the U.S. WhiteWave business it purchased last year.

For the second quarter Danone (EPA:BN) revealed half yearly net profit closing June 30 surged to 977 million Euros or $1.15 billion from EUR880 million.

Meanwhile the maker of Actimel and Activia’s operating profit on a recurring basis, which is a closely watched indicator that leaves out the impact of takeovers and foreign exchange fluctuations was EUR1.72 billion for the period. That was 16% more year over year and on top of market outlook of EUR1.65 billion.

During the last three months period revenue surged 9.7% to EUR12.13 billion as the company received a hit from consolidating the operations of WhiteWave, the U.S. organic foods producer that it purchased for $10.4 billion earlier this year.

Furthermore company’s chief Executive Emmanuel Faber has faced a hold back in emerging markets and altering preferences in urbanized countries, where customers are more and more turning toward healthy and organic items rather than conventional ones.

To counter that, Mr. Faber has spent heavily to bolster its high-class product line as he attempt to return the company to “strong, profitable and sustainable growth,” by 2020.

“As expected, the slow start of the year is the result of specific emerging markets’ headwinds and challenges in Europe and in North America,” Mr. Faber said.

Earnings report revealed that company’s like-for-like sales plunged 2% in international dairy in the first half and dropped 2.9% in North America. Baby and medical food sales went up 5.4% to EUR3.45 billion.

Moreover, Danone (BN) said in a statement, its recurring operating margins during the first half of 2017 hit 14.2%, a rise of 0.91% points like-for-like.