Danone’s profits curdled by Morocco boycott

Danone said their net profit decreased by 4.1 percent in 2018. (Reuters)
Updated 19 February 2019
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Danone’s profits curdled by Morocco boycott

  • Moroccans started a boycott against Danone’s milk because of the high prices
  • The boycott is going on since April 2018

PARIS: A consumer boycott on Danone products in Morocco contributed to the French food giant’s profits and sales sinking last year, it said Tuesday.
The world’s largest yoghurt maker said in a statement that its net profit fell by 4.1 percent to $2.65 billion in 2018.
Sales dropped by 2.1 percent in the last three months of the year, driven by a 35 percent plunge in Morocco, where there has been unprecedented boycott campaign over high prices against Danone milk and two other well-known brands since April.
The boycott’s impact in 2018 “on total net sales was a decrease of -$201 million versus 2017 net sales, of which around two thirds come from losses in milk sales, and one third from losses in dairy products,” the company said in a statement.
Chief financial officer Cecile Cabanis said in a conference call that there was still a market share for Danone’s products in Morocco, but she did not expect to return to growth there before the end of 2019.
The boycott campaign against the high cost of living in Morocco spread like wildfire online last year, calling on Danone milk, Afriquia service stations and Sidi Ali water — the leaders in their sectors — to lower their prices.
Despite the boycott, the company said its full-year reported sales were down just 0.7 percent
It benefited from sales of dairy products stabilizing in Europe, growing strongly in the CIS region that includes most ex-Soviet countries and also improving in Latin America.
In North America, sales in the “essential dairy and plant-based” food products division surged by 12.2 percent to five billion euros.
Sales of infant formula products fell in China, but Cabanis said the decline was slowing, dropping from 20 percent in the third quarter to 10 percent in the fourth.
Looking ahead to the current year, Danone is aiming for like-for-like sales growth of three percent and an operating margin above 15 percent.
Following the announcement, the company’s share price bumped upwards by 0.3 percent in morning trading in Paris.


Dubai schools allowed to raise fees after last year’s freeze hit GEMS listing

Updated 18 min 58 sec ago
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Dubai schools allowed to raise fees after last year’s freeze hit GEMS listing

  • UAE authorities fixed the fees in hopes of stimulating the economy
  • The maximum increase for next year will be 2.07 percent for 90 percent of the schools

DUBAI: Dubai will allow a modest increase in school fees for the majority of students in the 2019-2020 academic year, the government said, after last year’s freeze triggered a delay in the London listing of a major school operator.
The move is likely to provide some reprieve for private investors such as private equity firms, who own most of the schools in the country, a Gulf Arab state that acts as a Middle East hub for international companies.
Last year’s move to freeze Dubai school had hit the initial public offering of Blackstone-backed, Middle East-focused education company GEMS, Reuters had reported, citing sources. The London listing was delayed after authorities in Dubai unexpectedly decided to freeze tuition fees, meaning the company’s financial forecasts had to be adjusted, they said.
Dubai’s move last year to freeze school fees came amid a number of other measures to cut costs in a bid to stimulate the economy that has been hurt by a downturn in property prices.
The Dubai government said it will allow an increase in school fees for 90 percent of students by a maximum 2.07 percent from the 2019-2020 academic year.
Sheikh Hamdan bin Mohammed bin Rashid Al-Maktoum, the crown prince and son of Dubai’s ruler, approved the new framework where the Dubai School Inspection Bureau will assess the quality of education in each school against its index and rank them accordingly.
Schools in which the quality of education is declining according to the government’s index will not be allowed to increase their fees.
Only 10 percent of the students in Dubai will have their fees increased by more than 2.07 percent, it said.