Consumption trends eyed as Danone reports Q3 sales
* Q3 underlying sales growth seen up 5.6 pct - Rtrs pollBy Dominique VidalonPARIS, Oct 18 (Reuters) - Consumption trends for the rest of
the year and in 2012 amid global recession fears will be in
focus along with the outlook for commodity prices when French
food group Danone reports third quarter sales on
Tuesday.The world’s largest yoghurt maker is expected to post higher
sales but slower growth in the third quarter as challenges in
the Russian and U.S. dairy markets and a return to more normal
growth rates at its water business take their toll, and
investors will be keen to hear whether the weakness is
temporary.”Investors are also likely to watch for any initial guidance
on 2012 input cost inflation, which should be more benign than
2011” Societe Generale analysts said in a note.Analysts polled by Reuters on average expect Danone to post
third-quarter sales of 4.8 billion euros, a reported rise of
10.6 percent. Closely-watched underlying sales growth is
forecast at 5.6 percent.This would mark a slowdown from 8.7 percent in the first
half. Danone Chief Executive Franck Riboud said last month he
expected underlying growth of 5-6 percent in the quarter.Danone, whose brands include Actimel and Activia, at the
time kept its targets for full-year underlying sales growth of
6-8 percent and for an improvement in operating margin of 20
basis points.Danone has forecast a rise of 6-9 percent in commodity costs
this year and it raised its prices during the first half to
combat this expected rise.Attention will also focus on the newly acquired Russian
Unimilk business, which has suffered from higher milk costs and
a repositioning of the business towards higher value-added milk
products, which comes at the expense of sales volumes.Russia accounts for 11 percent of Danone’s sales, as does
France, and they are the two top contributors to group sales.Meanwhile, the U.S. market, where Danone generates 8 percent
of sales, has been seeing strong growth in the Greek yoghurt
segment, which has cannibalised other areas where Danone has a
stronger presence, analysts said. To address that situation,
Danone relaunched a Greek yoghurt in July in the United States.Danone’s water business was boosted in the second quarter
by strong demand from Japan after the Fukushima nuclear disaster
and by warm weather in Europe. Third-quarter water sales are
expected to reflect poorer weather in Western Europe.Danone’s acquisition strategy will also be in focus after it
said it was on the lookout for expansion in fast-growing
markets.
