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MarketScreener Homepage  >  Equities  >  Euronext Paris  >  Danone S.A    BN   FR0000120644

DANONE S.A

(BN)
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Real-time Quote. Real-time Euronext Paris - 01/22 08:51:59 am
54.86 EUR   -0.40%
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Danone to cut jobs, product lines in virus-led restructuring

11/23/2020 | 07:20am EST
FILE PHOTO: A company logo of the French food group Danone is pictured on a truck in Mexico City

LONDON (Reuters) - French food group Danone plans to cut up to 2,000 jobs, trim product ranges and reorganise its global business to become leaner and more agile in a post-COVID environment.

The world's largest yoghurt company on Monday said these actions would help it save 1 billion euros a year by 2023 and meet a new mid-term margin target.

"We have never, ever been so ambitious at Danone," CEO Emmanuel Faber said.

Still, Danone sounded a cautious tone on 2021, forecasting a flat margin and saying the first half would be hurt by comparisons with this year's COVID-related stockpiling and continued travel restrictions.

That caution, and a focus on cost-cuts rather than on how it will drive demand for goods such as Evian water and Activia yogurt, disappointed investors, since Danone has set similar targets in the past and continues to lag peers.

"Danone is doubling down on a strategy that hasn't worked for the last 5 years," said Bernstein analysts.

The company's shares, which Faber noted trade at a 30-percent discount to peers, were down more than 2 percent in Paris, bringing their year-to-date fall to more than 30% despite a rally at the start of the month fuelled by optimism about a COVID-19 vaccine.

Danone said it chose to focus on efficiency first as that was within its control. It plans to give further updates on a broad turnaround plan announced last month.

'LOCAL-FIRST'

Danone plans to cut 1,500 to 2,000 jobs in local and global headquarters, about a quarter of such roles, with a source close to the company saying about 400-500 of those would be in France.

At the same time, Danone is reshaping itself into a 'local-first' company, giving business units around the world more autonomy, and promoting their zone presidents to the executive committee.

It also plans to reduce its range of goods by 10-30% in the next year, dropping small products that account for up to 2% of sales.

Danone says it expects to return to profitable growth as soon as the second half of 2021, and for its recurring operating margin to return to its pre-COVID level, at more than 15% by 2022. It sees a mid-to-high teen margin level in the mid-term.

It plans to reinvest 20-30% of its savings into growth initiatives as it tries to reconnect with its mid-term sales growth target of 3-5%. The program will cost 1.4 billion euros, mainly in 2021.

"The credibility of the new targets will be questioned given Danone's failure to deliver its previous (mid-term) margin target," Jefferies analysts said.

Danone reiterated its 2020 guidance for 14% recurring operating margin and 1.8 billion euros of free cash flow.

It said it was making progress with the strategic review of two assets announced in October, but said there would be more news on portfolio pruning during the first half of the year.

CEO Faber told a French newspaper that a sale of its water business, which had been mooted by some analysts, was not on the agenda.

($1 = 0.8420 euros)

(Reporting by Martinne Geller; Additional reporting by Gwenaelle Barzic in Paris; editing by Rashmi Aich, Keith Weir and Kirsten Donovan)

By Martinne Geller


© Reuters 2020
Stocks mentioned in the article
ChangeLast1st jan.
DANONE S.A -0.36% 54.86 Real-time Quote.2.46%
NESTLÉ S.A. 0.78% 101.14 Delayed Quote.-3.74%
UNILEVER PLC 0.51% 4376 Delayed Quote.-0.89%
All news about DANONE S.A
01/19EUROPE : European stocks slip as lockdown worries resurface
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01/19DANONE : Gets a Sell rating from UBS
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01/19Danone's CEO in the spotlight after activist calls for shake-up
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01/19European stocks slip as lockdown worries resurface
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01/19DANONE : Jefferies maintains a Buy rating
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01/18DANONE : Goldman Sachs remains Neutral
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01/13DANONE : Bernstein remains a Sell rating
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01/12DANONE : Receives a Sell rating from UBS
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01/12DANONE : JP Morgan reiterates its Neutral rating
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01/12DANONE : Goldman Sachs gives a Neutral rating
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More news
Financials
Sales 2020 23 737 M 28 875 M 28 875 M
Net income 2020 1 926 M 2 343 M 2 343 M
Net Debt 2020 12 006 M 14 605 M 14 605 M
P/E ratio 2020 18,4x
Yield 2020 3,66%
Capitalization 35 768 M 43 439 M 43 509 M
EV / Sales 2020 2,01x
EV / Sales 2021 1,99x
Nbr of Employees 102 449
Free-Float 91,2%
Chart DANONE S.A
Duration : Period :
Danone S.A Technical Analysis Chart | BN | FR0000120644 | MarketScreener
Technical analysis trends DANONE S.A
Short TermMid-TermLong Term
TrendsBullishNeutralBearish
Income Statement Evolution
Consensus
Sell
Buy
Mean consensus OUTPERFORM
Number of Analysts 31
Average target price 60,09 €
Last Close Price 55,08 €
Spread / Highest target 35,1%
Spread / Average Target 9,10%
Spread / Lowest Target -23,4%
EPS Revisions
Managers and Directors
NameTitle
Emmanuel Faber Chairman & Chief Executive Officer
Cécile Cabanis Vice Chairman, CFO, EVP-Technology, Data & Cycles
Domitille Doat-Le Bigot Chief Digital Officer
Franck Riboud Honorary Chairman
Benoît Potier Non-Independent Director
Sector and Competitors
1st jan.Capitalization (M$)
DANONE S.A2.46%43 439
NESTLÉ S.A.-3.74%315 304
MONDELEZ INTERNATIONAL, INC.-4.02%80 261
THE KRAFT HEINZ COMPANY-5.42%40 078
GENERAL MILLS, INC.-5.88%33 806
THE HERSHEY COMPANY-1.77%31 009