Exchange rates sour Danone's sales, but not target

PARIS - Danone said on Wednesday its sales slid 4.4 percent in the third quarter due to the plunge in the value of emerging market currencies, although the French food giant confirmed its annual target of double-digit earnings growth.

The sales figure of 6.2 billion euros ($7.2-billion) was impacted by the appreciation of the euro compared to Argentina's peso, Turkey's lira and Brazil's real, all of which fell by more than 20 percent.

When sales in those countries were converted into euros for global accounting, they were considerably lower than in the same quarter last year, dragging down the figure by an estimated 5.2 percentage points.

When the sales were restated at constant exchange rates, they grew by 1.4 percent.

Only the dairy and plant-based unit in North America saw sales growth at current exchange rates, rising 1.4 percent to nearly 1.3 billion euros. Elsewhere, they fell by 8.1 percent.

On a like-for-like basis, the waters unit showed 6.4 percent growth, but its specialised nutrition unit still recorded a 1.5 percent contraction.

However, chief executive Emmanuel Faber said in a statement the company has "the foundations in place to navigate current emerging market volatility and currency headwinds, which will enable us to continue to deliver sustainable profitable growth.

The company reaffirmed its guidance for the full year, which is double-digit recurring earnings per share using constant exchange rates.

The company's share price dropped 2.0 percent in early morning trading in Paris, the worst performer on the CAC 40, which was up nearly 0.3 percent overall.


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