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ORIGINAL FRENCH ARTICLE: Danone a le vent en poupe

by Gérard Le Puill

Danone Is On a Roll.

Translated Sunday 28 October 2007, by Gene Zbikowski

Agribusiness. Franck Riboud’s multinational chalks up 20% profit growth.

Yesterday the Danone group presented worldwide growth figures for the first nine months of 2007. The volume of worldwide sales grew by 3.9%. Growth in Western Europe, and in particular in France, was slowed by a fall in the sale of drinks due to unusually poor weather conditions this summer, but the fresh dairy sector proved to be dynamic, with 11.9% growth in the third quarter. The biscuits and cereal activity grew by 6.6%, with roughly 5% growth in Europe. For the year 2007 as a whole, Danone expects a 6% to 8% increase in world turnover on a like-for-like basis. The multinational headed by Franck Riboud also reported “trading operating margin progression of at least +20 bp on a like-for-like basis (at the current scope of consolidation), and this despite significant input cost headwinds.” The group also pointed out to its shareholders that “all areas applied price increases to cover the increase in the price of raw materials.”

This detail deserves to be known at a time when the Commission for the liberation of French growth, presided over by Jacques Attali, is recommending an increase in the number of superstores and the abolition of the Galland law in order to “achieve a consolidated reduction in consumer prices by several percent.” Due to the large amount of shelf space that Danone occupies, it will always be able to dictate its prices to retailers, who will take advantage of the new freedom they are demanding from the authorities in order to strangle smaller agribusiness companies and the farmers who provide raw materials.

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