Danone keeps growth outlook despite Morocco boycott

Employees Centrale Danone, a subsidiary of Danone, protest in front the parliament in Rabat on June 5 against the boycott of the brand in Morocco. (AFP)
Updated 27 July 2018

Danone keeps growth outlook despite Morocco boycott

  • Second-quarter like-for-like sales rose 3.3 percent, topping the 3.1 percent expected by analysts
  • Danone makes 6 percent of its group sales in Morocco

PARIS: Danone is counting on baby food sales in China to help power annual earnings higher despite setbacks in Morocco and Brazil that slowed second quarter sales, the French food group said on Friday.
“We are entering the second half with an operating model capable of offsetting these headwinds,” Chief Financial Officer Cecile Cabanis said on Friday, referring to a boycott in Morocco and a trucking strike in Brazil.
Danone “will progress toward its 2020 ambition through further sales growth and an improved recurring operating margin,” the group said in a statement.
Second-quarter like-for-like sales rose 3.3 percent, topping the 3.1 percent expected by analysts.
This beat the 2.6 percent reported by rival Nestle but marked a slowdown from 4.9 percent in the first quarter.
Danone is targeting like-for-like sales growth of 4-5 percent by 2020 and an operating margin above 16 percent. It reported a margin of 14.27 percent for the first half.
Shares in the world’s largest yoghurt maker were up 1.9 percent in early trading. Brokerage Liberum described the results as “solid” and kept its “buy” rating on Danone.
Operating profit rose 7.9 percent in the first half helped by cost controls and its takeover of US organic food maker WhiteWave last year.
Chinese demand for baby food and sales at its water division remained solid while its dairy business in North America returned to growth in the second quarter.
The boycott in Morocco was launched earlier this year on social media against what protesters say are unfair prices set by large companies.
Danone, which makes 6 percent of its group sales in Morocco, said last month its local dairy unit Centrale Danone had lost more than 50 percent of its fresh milk market share due to the boycott.
Cabanis said Danone was seeking to regain consumer trust.
“Sales continued to decline in Brazil where the truckers’ strike exacerbated already difficult market conditions,” Danone said in its statement.


US removes some Chinese furniture, modems from planned 10% tariffs

Updated 17 August 2019

US removes some Chinese furniture, modems from planned 10% tariffs

  • US President Donald Trump on Tuesday delayed more than half of the proposed tariffs until December
  • The $114 billion retail furniture industry has been among the sector’s hardest hit with price increases due to Trump’s tariffs

WASHINGTON: The Trump administration is sparing some Chinese-made household furniture, baby items and Internet modems and routers from its next rounds of 10 percent tariffs, it said on Friday.
The US Trade Representative’s office released a complete list of the items that were removed from $300 billion in tariffs scheduled to go into effect on Sept. 1 and Dec. 15, some of which had already been hit with 25 percent tariffs.
Trump on Tuesday delayed more than half of the proposed tariffs until December, saying it would help shield businesses and consumers from the US-China trade war fallout during the Christmas selling season.
The new list of 44 categories of spared imports, worth about $7.8 billion according to US Census Bureau data, also includes some chemical compounds used in the manufacture of plastics. Reuters previously reported that bibles and religious texts would be spared from the tariff list.
Modems and routers made in China were part of a $200 billion list of products hit with tariffs last September that have since been raised to 25 percent. Friday’s exclusion would avoid a further 10 percent hike as Trump imposes tariffs on Sept. 1 to products in the same broad customs category, including smart watches, smart speakers and Bluetooth headphones.
The bulk of the items removed from the tariff list were furniture products, including wooden- and metal-framed chairs and those made of plastics. Some of these were previously hit with tariffs as part of broader furniture categories.
Baby-related furniture items also were spared, including toddler beds, bassinets, cradles, strollers and children’s seats.
The $114 billion retail furniture industry has been among the sector’s hardest hit with price increases due to Trump’s tariffs, which rose to 25 percent in May.
The US Labor Department said on Tuesday that the price index for household furnishings rose 0.4 percent in July, marking its third consecutive monthly increase and contributing to broad-based growth in consumer prices during July.