July 27, 2018 / 5:42 AM / a year ago

Danone Q2 sales growth slows as Morocco boycott weighs

PARIS, July 27 (Reuters) - French food group Danone said sales growth slowed in the second quarter, reflecting lost dairy sales stemming from a consumer boycott in Morocco and a truck strike in Brazil.

Chinese demand for baby food and sales from its water division, however, remained solid and Danone also posted a 7.9 rise in first-half operating profit, helped by cost control.

Danone, which is the world’s largest yoghurt maker and has brands like Actimel and Activia, expected the boycott in Morocco to continue and to weigh on the second half performance.

“We are entering the second half with an operating model capable of offsetting these headwinds,” Finance Chief Cecile Cabanis told a call with journalists.

First-half operating profit reached 1.784 billion euros ($2.1 billion), a like-for-like rise of 7.9 percent, which was in line with a company-compiled median of analyst estimates for 1.785 billion euros in profit.

Second-quarter like-for-like sales, rose 3.3 percent - slightly above analysts’ expectations for 3.1 percent growth.

This marked a slowdown from 4.9 percent growth in the first quarter but beat the 2.6 percent achieved by rival Nestle in the second quarter.

Danone, which is targeting an operating margin above 16 percent and like-for-like sales growth of 4-5 percent by 2020, reiterated its expectation for a double-digit rise in 2018 underlying earnings per share (EPS), excluding the impact of the sale of a stake in Japan’s Yakult.

$1 = 0.8588 euros Reporting by Dominique Vidalon; Editing by Sudip Kar-Gupta

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