French food group Danone keeps profit outlook despite weak Q1

Danone said it was on track to deliver on its 2020 goals for an operating margin above 16 percent of its sales. (Reuters)
Updated 17 April 2019
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French food group Danone keeps profit outlook despite weak Q1

  • Danone said first-quarter underlying sales had risen by a relatively modest 0.8 percent to €6.138 billion
  • The company expects sales growth to accelerate in the second half of the year.

PARIS: French food group Danone kept its forecasts for a further rise in sales and profits this year although weaker demand for infant formula products in China and a consumer boycott in Morocco weighed on first-quarter sales.
Danone, the world’s largest yoghurt maker, said first-quarter underlying sales had risen by a relatively modest 0.8 percent to $6.94 billion (€6.138 billion), marking a slowdown from 2.4 percent growth in the fourth quarter of 2018.
The company nevertheless expected sales growth to accelerate in the second half of the year.
“The first quarter showed a start of the year in line with expectations ... We are pleased with the momentum of the business which will become increasingly visible from the second quarter. This gives us every confidence that we will meet our full year guidance,” CEO Emmanuel Faber said in a statement.
Danone reiterated it was targeting group like-for-like sales growth of around 3 percent and an operating margin above 15 percent for 2019.
Danone added it was on track to deliver on its 2020 goals for an operating margin above 16 percent of its sales and like-for-like sales growth of 4-5 percent.
Danone’s waters division and its dairy business put in solid performances over the quarter, but sales of Danone’s Early Life Nutrition products in China fell around 15 percent in the quarter, partly due to a lower birth rate in China.
This compared with a 10 percent decline in the fourth quarter 2018 and a 20 percent decline in the third quarter, in that division.
China is an important source of growth for Danone, contributing about 30 percent of sales of the Early Life Nutrition business, which makes infant formula and general baby food products.
Danone said it still expected the business in China to return to growth in the second half of 2019.
Danone also said its sale of Earthbound Farm, announced last week, would improve its recurring operating margins in 2019.


India suspends Kashmir border trade with Pakistan

Updated 24 min 33 sec ago
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India suspends Kashmir border trade with Pakistan

  • Kashmir has been on edge since a February suicide attack that killed 40 Indian paramilitaries
  • India said it had reports that trade on the border was being “misused by Pakistan-based elements for funnelling illegal weapons, narcotics and fake currency”

NEW DELHI: India has suspended trade across its disputed Kashmir border with Pakistan, alleging that weapons and drugs are being smuggled across the route, as tensions simmer between the nuclear-armed neighbors.
Kashmir has been on edge since a February suicide attack that killed 40 Indian paramilitaries and brought the two countries to the brink of war with cross-border air strikes.
On Thursday, India’s government, which is in the middle of a tough national election, said it had reports that trade on the border was being “misused by Pakistan-based elements for funnelling illegal weapons, narcotics and fake currency.”
It also said many of those trading across the Line of Control, which divides Kashmir into zones under Indian and Pakistani control, had links to militant organizations.
The home ministry said trade would be suspended until a stricter inspection mechanism is in place.
The cross-border trade is based on a barter system, with traders exchanging goods including chillies, cumin, mango and dried fruit.
It began in 2008 as a way to improve strained relations between New Delhi and Islamabad, who have fought two of their three wars over the disputed region.
The Indian Express newspaper said Friday that 35 trucks carrying fruit traveling from the Indian side of the border had been stopped after the government order.
Trade on the border has been suspended before, including in 2015, when India accused a Pakistani driver of drug trafficking.
The latest move comes after India withdrew “Most Favoured Nation Status” — covering trade links — from Pakistan after the February attack, which was claimed by the Pakistan-based Jaish-e-Mohammed Islamist group.
Islamabad has denied any involvement in the attack.
India’s Hindu nationalist Prime Minister Narendra Modi has made national security a key plank of his re-election campaign, pointing to the recent flare-up of violence as he battles the center-left opposition Congress party.
He is seeking a second term from the country’s 900 million voters in the mammoth election which kicked off on April 11 and runs till May 19. The results will be out on May 23.