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.

Creditors take action against Al Jaber in decade-long saga

Updated 23 September 2020

Creditors take action against Al Jaber in decade-long saga

  • The downturn in the Gulf construction sector has triggered a number of corporate restructurings as companies are forced to reschedule debt, raise fresh borrowing or enter insolvency protection

DUBAI: Creditors have started to enforce claims against Abu Dhabi-based Al Jaber Group, in a dispute triggered by a construction downturn in the UAE more than a decade ago.

Al Jaber, a contractor with interests across a range of sectors, has struggled since building up debt in the wake of a UAE real estate crisis and began talks with creditors in 2011.

Abu Dhabi Commercial Bank, which is working as restructuring and security agent, said in a document dated Sept. 21 which was seen by Reuters, that it had instructions from the majority of creditors to proceed with claims against Al Jaber.

A representative for Al Jaber did not immediately respond to a request or comment. ADCB declined to comment.

The move follows delays in restructuring agreements, under which Al Jaber was to appoint a new board and sell companies and assets such as the Shangri-La hotels in Dubai and Abu Dhabi.

In exchange, creditors had agreed to extend the maturity of a 5.9 billion dirhams ($1.61 billion) loan, cut interest rates, and provide additional revolving debt.

The initial enforcement action now being pursued by creditors includes the “acceleration and demand for payment of amounts outstanding” under the previously agreed debt restructuring, a source familiar with the matter said.

Enforcement will also allow creditors to claim against Al Jaber’s chairman under a 4.5 billion dirham loan to the company.

Several UAE companies have sought to extend debt maturities or agree better terms in recent years to avoid defaults, after an oil price crash hit energy services and construction.

The coronavirus crisis has added to the strain and Arabtec Holding, the UAE’s biggest listed contractor, this week will discuss options including dissolution after the pandemic hit projects and led to additional costs.

Meanwhile, Dubai-listed construction firm Drake & Scull is working to reach an agreement with its creditors in an out-of-court process.