RPT-Danone Q1 baby food sales fall less than expected

PARIS, April 16 Wed Apr 16, 2014 1:38am EDT

PARIS, April 16 (Reuters) - Danone, which is aiming to rebuild its position in China after an infant formula product recall in Asia last year, said first-quarter sales fell 7.7 percent at its high-margin baby food division, less than analysts had expected.

The world's largest yoghurt maker, with brands including Actimel and Activia, said its European dairy business continued to improve in the quarter and kept its full-year sales and profitability goals, saying it was targeting a return to "strong, sustainable, profitable growth" from the second half.

Like-for-like group sales grew 2.2 percent year-on-year in the quarter, a slowdown from 2.9 percent growth in the fourth quarter of 2013, Danone said on Wednesday.

The performance was slightly better than the company-compiled average analyst estimates of 2.1 percent growth in group sales and a 9 percent decline in baby food sales.

Total sales, which include the effects of foreign exchange fluctuations, reached 5.06 billion euros ($7 billion), a reported decline of 5.2 percent due to negative currency effects.

Danone kept its 2014 target of like-for-like sales growth of 4.5-5.5 percent. It also stuck to a forecast for its 2014 operating margin to be stable within a range of 20 basis points lower to 20 basis points higher. ($1 = 0.7234 Euros) (Reporting by Dominique Vidalon; Editing by James Regan)