September 6, 2017 / 1:22 PM / 17 days ago

Danone chief optimistic on reaching 2020 goals

FILE PHOTO - The logo of French food group Danone is seen during a news conference to present the company's 2015 annual results in Paris, France, February 23, 2016. REUTERS/Charles Platiau

PARIS (Reuters) - The head of Danone (DANO.PA), the latest European consumer goods company targeted by activist investors, expressed optimism on Wednesday about his group’s ability to reach its targets of improved profitability and sales growth by 2020.

Danone, the world’s largest yoghurt group, promised in May to lift its recurring operating margin to beyond 16 percent by 2020 from 13.8 percent last year and to deliver like-for-like sales growth of 4-5 percent by 2020 against 2.9 percent in 2016.

“I am extremely confident in our ability to reach these numbers,” CEO Emmanuel Faber said at the Barclays “Back-to-Scool” Consumer Staples conference, in a speech that was webcast.

Danone has recently been touted as a potential target for suitors or activist shareholders, given that its profits are below many of its peers and its sales have disappointed while it has no large controlling shareholder.

Last month, activist hedge fund Corvex Management bought a 0.8 percent stake in Danone, a move that closely followed recent engagement by other activist shareholders at larger rivals Nestle SA (NESN.S) and Procter & Gamble Co (PG.N).

Corvex has not made any demands on Danone yet but its presence is likely “to keep up pressure on Faber to deliver on his commitments...which should be enough to drive the stock forward,” Bernstein analyst Andrew Wood said in a recent note.

Faber said he notably banked on synergies from Danone’s acquisition of U.S. organic food producer WhiteWave, a one billion euro cost-cutting plan named Protein and the restructuring of its European dairy business.

There was also “huge traction” for the group’s brands in emerging countries, he said, highlighting that growth had resumed in China in the Early Life Nutrition market, which he said was “extremely good news”.

Reporting by Dominique Vidalon; Editing by Brian Love

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