French food group Danone unveiled on November 14 new sales growth targets as it vowed to bolster the profitability of its struggling dairy division. The world's largest yoghurt group is aiming for organic sales growth - which excludes acquisitions and currency moves - of more than 5 percent by 2020, and an increase of at least 200 basis points in the operating margin of its dairy division between 2015 and 2020, according to slides on its website.
The group is also sticking with its 2015 targets for organic sales growth of 4-5 percent and a slight rise in operating margin from last year's 12.59 percent, the slides showed.
In the dairy division, which accounts for half of Danone's revenue, the owner of the Activia and Actimel yoghurt brands has been cutting costs and launching new products to counter weak consumer spending in Europe.
Recent problems have also included a food safety warning in Asia in 2013 that hit one of its key growth drivers, baby food in China.
Emmanuel Faber, who took over as Danone CEO in October 2014, was presenting to investors in Evian, eastern France, the group's strategy to deliver "strong profitable and sustainable growth" by 2020.
Under the plan, Danone is also aiming for yearly growth in trading operating margin, cash and earnings per share.
By 2020 Danone is targeting 3-5 percent organic sales growth in its dairy division, 7-10 percent growth in both mineral water and infant nutrition and 6-8 percent in medical nutrition. Kepler analysts said in a note the new targets were "credible" and reiterated a "buy" rating on the stock. "Estimates may nudge up after the investor event while the company's transformation under new management will continue to gain credibility with investors" the note said.
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