Danone launches €1bn cost-saving scheme

By Matt Atherton

- Last updated on GMT

Dairy and nutrition firm Danone launched an efficiency plan to save €1bn
Dairy and nutrition firm Danone launched an efficiency plan to save €1bn

Related tags Like-for-like sales Better Milk Danone

French dairy and nutrition company Danone has launched a cost-cutting and efficiency scheme, designed to save €1bn (£850M) by 2020, after its European sales fell 1.4% last year.

The efficiency programme – known as ‘Protein’ – was launched as a response to the “increasingly volatile and complex environment”​, Danone said. The scheme would help it “spend better, buy better” ​and work more sustainably, it added.

Danone ceo Emmanuel Faber said: “I have decided to address our efficiency agenda in a radically new way, and to launch a comprehensive, company-wide programme,​ allowing us to spend better and more sustainably and to work more efficiently.

Like-for-like sales increased

Danone revealed the scheme in its full-year financial statement today (February 15), which also showed total like-for-like sales increased 2.9% to €29.9bn (£25.4bn).

Its Fresh Dairy Products division reported a 2% rise in sales to €10.7bn (£9.1bn), while the Medical Nutrition division reported €1.6bn (£1.4bn) in sales – a rise of 7.4% compared with 2015.

Danone’s European sales were the only part of the world to report a drop in sales. North American sales were up 4.6%, while sales to the rest of the world increased 6.7%.

‘Seize consumer opportunities’

Faber said: “While we delivered a robust performance leading to a very strong recurring earnings per share growth in 2016, the challenges we faced, including a slower turnaround of dairy in Europe and major market volatility, are a clear case to step up in our ability to seize consumer opportunities and improve our efficiency.”

The company aimed to deliver earnings per share growth of 5% by the end of this financial year. Improving margins and efficiency were Danone’s priority this year, it said, as it expected economic conditions to remain “particularly volatile and uncertain”​. It predicted a year-on-year mid-single digit rise in raw material costs, and a steep rise in milk prices.

Meanwhile, Danone is in the process of completing a €12.7bn (£9.6bn) acquisition of US-based WhiteWave Foods​. Danone claimed the deal would “start a whole new and exciting chapter of our alimentation revolution journey”​.

Danone full-year results – at a glance

  • Total like-for-like sales up 2.9% to €29.9bn (£25.4bn)
  • European sales down 1.4%
  • Revealed €1bn (£850M) cost reduction scheme

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