Danone cheered investors this week, with shares up 4% to €63.37 as the dairy giant forecast another rise in sales and profits in 2016.
The group, which has made significant changes in the past 18 months, predicted sales growth would slow slightly next year to 3%-5% after like-for-like sales rose 4.4% and total revenues were up 6% to €22.4bn in 2015. Liberum, Bernstein and Morningstar described the results as “resilient”, “solid” and “respectable”.
Robert Waldschmidt at Liberum said the guidance looked prudent and achievable, enabling Danone to generate sustainable, profitable growth in 2016 and beyond. “CEO Emmanuel Faber has set out a clear strategy to deliver sustainable top and bottom-line growth and, while clear execution risks remain, we see more upside than downside at current levels.”
Philip Gorham, consumer strategist at Morningstar, added: “Danone’s performance against a backdrop of deflation in Europe, particularly in dairy, and a significant slowdown in China gives us much encouragement our growth-driven margin expansion thesis remains intact.”
Associated British Foods shares rose 1.2% to 3,295p on Monday (and 3.6% so far this week to a 2016 high) after it raised full-year earnings guidance, largely thanks to the weakening pound. As sterling plunged further against the dollar on renewed Brexit fears, ABF said the fall in value cut the impact of currencies on its results from £25m to £10m in the current financial year.
Shore Capital said the strength of the group’s balance sheet was “a great source of comfort” in volatile economic times. “The balance sheet is a resource which provides considerable fire-power to be active in the M&A market.”
Kerry Group also enjoyed a good week, with its stock rising 5.7% to €76.33 since Monday morning (4.2% of which came on Wednesday) after it posted a solid rise in full-year earnings and revenues last year. The Irish group increased revenues 6.1% to €6.1bn and volumes rose 3.8% in 2015. Kerry predicted further growth in 2016.
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