French food group Danone keeps goals after weak start to 2021

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PARIS (Reuters) – Danone on Tuesday kept its goal of returning to profitable growth in the second half of 2021 after posting a 3.3% fall in first quarter sales, as COVID-19 lockdowns continued to dent its bottled water and baby food sales.

The French food group, which is searching for a new chief executive, said it was banking on a gradual reopening of economies from the second half of this year onwards, as COVID vaccination programs are rolled out.

Former boss Emmanuel Faber was abruptly ousted as chairman and CEO last month, following clashes with some board members over strategy and calls from activist funds for him to resign over the group’s lackluster returns compared with some rivals.

Danone did not elaborate on the CEO search, but said it would pay “careful attention to ensuring a proper transition.”

The company reiterated it expected a return to like-for-like sales growth in the second quarter and that its full-year 2021 operating margin would be broadly in line with the 14% achieved in 2020.

Danone, the world’s largest yoghurt maker, said its like-for-like sales fell 3.3% to 5.657 billion euros ($6.82 billion) in the first quarter, compared with expectations for a 3.7% decline in a company-compiled consensus of 19 analysts.

The company, under departed CEO Faber, has pursued a strategy centered on diversifying into fast-growing products featuring probiotics, protein and plant-based ingredients to mitigate slower growth in dairy.

The COVID-19 pandemic has however complicated prospects for the French company, which makes bottled water such as Evian and suffered as sales to the restaurant sector dwindled during government-enforced lockdowns. Meanwhile infant formula sales have also been hit by slowing birth rates in China.

($1 = 0.8293 euros)