April 26, 2018 / 2:12 PM / in 6 months

French group Danone targets virtuous circle over coming decade

PARIS (Reuters) - Danone (DANO.PA) Chief Executive Emmanuel Faber is banking on the world’s biggest yoghurt maker’s push into healthy eating and sustainability to deliver sales growth above that of its peers over the coming decade.

FILE PHOTO: The logo of French food group Danone is seen at the company's headquarters in Paris, France, December 20, 2017. REUTERS/Charles Platiau/File Photo

Danone, which is “well under way” on its 2020 goals for higher profits and sales, plans to launch a company-wide consultation before unveiling targets for 2020-2030 in the first half of next year, Faber told Reuters by phone.

Faber was speaking ahead of Danone’s annual meeting where the owner of Activia yoghurt and Evian water was introducing nine broad-based goals towards 2030, including delivering “superior sustainable profitable growth”.

These goals, which also include pledges to preserve and renew natural resources on the planet, are in line with the 2030 sustainable development goals of the United Nations.

Asked what “superior” growth entailed, Faber said: “We chose to focus on product categories with superior growth like pro-biotics, organic food or water that will help us deliver organic sales growth above that of our peers, above the food industry’s average in the coming 10 years,”

Last year, Danone bought U.S. organic food producer WhiteWave in a $12.5 billion (9 billion pounds) deal, to boost growth and bring the company more into line with healthier eating trends.

Danone will consult its 100,000 employees on the roadmap to 2030 under the “One Voice” programme before unveiling specific targets, most likely near the time of the 2019 AGM, he said.

“We are giving ourselves one year to decide on precise 2030 targets and indicators and on the speed at which to move towards these goals,” Faber said.

By next year, Danone will also grant each employee one free share in combination with an annual amplified dividend-based incentive scheme.

A mechanism similar to the current French employee company investment fund will also be rolled out globally over the next few years, so that employees can invest at a discounted price.

As more consumers opt for healthier diets and try to pursue a more socially responsible lifestyle, Danone, along with rivals such as Nestle (NESN.S), has been seeking to rebuild consumer trust in big food companies.

Faber, the first Danone CEO from outside the founding Riboud family, is seeking not only to boost shareholder value and profits but also meet other targets on the environment and social policies.

In line with that goal, Danone North America this month won formal certification as a for-profit corporation comitted to positive social and environmental goals (B-Corp).

The group has now eight units certified as B-Corp, making about 30 percent of global sales of 25 billion euros.

Danone, alongside consumer goods peers such as Nestle and Unilever, is under investor pressure to improve results and it needs to deliver on 2020 targets for an operating margin above 16 percent and like-for-like sales growth of 4-5 percent.

Last week, it reported first-quarter sales growth of 4.9 percent, its biggest percentage rise since the fourth quarter 2014, and beating the 2.8 percent quarterly growth of Nestle.

Reporting by Dominique Vidalon; Editing by Keith Weir

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