French food group Danone
Gains in Russia and the United States helped the world's largest yoghurt maker, with brands such as Actimel and Activia, to beat first-quarter sales forecasts on Tuesday and confirm its annual financial goals.
The Paris-based group, which makes around 60 percent of its sales in yoghurt and other dairy products, has suffered from a sharp rise in milk prices in Russia, and was caught out by a surge in demand for Greek yoghurt in the United States.
Russia is Danone's joint biggest market along with France and the group has focused on integrating its 2010 Unimilk acquisition to boost profits. It is also playing catch up in the United States by raising Greek yoghurt production, with its Oikos brand gaining market share.
It's a good start to the year. We are staying cautious but we are optimistic, Chief Financial Officer Pierre Andre Terisse told journalists in a conference call.
Danone said its like-for-like sales grew 6.9 percent in the first three months of 2012, beating analysts' forecasts for a 5.8 percent rise, and held its 2012 targets for 5-7 percent like-for-like sales growth and a flat operating margin.
The growth was led by improved dairy sales growth, good emerging market growth of its Evian and Volvic bottled waters and strong demand for its babyfoods such as Bledina.
We think these results should be well received, said Liberum Capital analysts in a note.
Danone shares were up 2 percent at 52.58 euros by 0815 GMT, outperforming the European sector, which was 0.8 percent higher. Danone shares have gained 6.2 percent this year, in line with the Stoxx Europe 600 food and beverage sector <.SX3P>.
Danone, which competes with Nestle
Deteriorating market conditions in Spain will impact the whole year, Terisse cautioned.
Group dairy sales grew 3.8 percent in the first quarter, an improvement from 3 percent growth in the fourth quarter, as price increases made up for sluggish volume growth. Latin America and Asia showed double-digit growth but Europe fell back slightly in the quarter on southern European weakness.
Total sales, which include the effects of foreign exchange fluctuations, reached 5.12 billion euros ($6.68 billion), a reported rise of 7.6 percent.
The French food giant kicks off the reporting season for European food manufacturers, with Nestle reporting on April 20 and Anglo-Dutch group Unilever on April 26.
Danone is among potential bidders for Pfizer's
(Reporting by Dominique Vidalon; Editing by David Jones and Mark Potter)