* Q1 like-for-like sales up 6.9 pct vs 5.8 pct forecast
* Danone keeps 2012 financial goals
* Southern Europe sluggish, Russia, U.S. improving
(Adds comment from conference call, additional details)
PARIS, April 17 French food group Danone
kept its full year goals intact despite a worsening
economic climate in austerity-hit Southern Europe, saying it
banked on strong demand from emerging markets to underpin its
The world's largest yoghurt maker, with brands including
Actimel and Activia, also said first-quarter sales beat
expectations after its lagging dairy division showed signs of
turning the corner in the key U.S. and Russian markets.
"It's a good start to the year. We are staying cautious but
we are optimistic," Chief Financial Officer Pierre Andre Terisse
told journalists in a conference call.
Like-for-like sales grew 6.9 percent in the quarter,
beating analysts' forecasts for 5.8 percent growth, driven by
strong demand for baby food, medical nutrition - mostly liquids
administered to hospital patients - and water in emerging
Total sales, which include the effects of foreign exchange
fluctuations, reached 5.117 billion euros ($6.68 billion), a
reported rise of 7.6 percent.
Danone confirmed its target of 5-7 percent like-for-like
sales growth for 2012 and a flat operating margin.
Danone, which competes with Nestle and Unilever
, is the most exposed among big food groups to
the euro zone debt crisis with around 40 percent of sales in the
region. It makes 11 percent of its sales in France and a further
7 percent in austerity-hit Spain.
The French food giant kicks off the reporting season for
European food manufacturers, with Nestle reporting on April 20
and Anglo-Dutch group Unilever on April 26.
Danone, whose global brands also include Bledina baby food
and Evian and Volvic waters, reiterated its previous forecast
that raw material prices would increase in a mid-single digit
percentage range in 2012.
In the dairy markets, which make 60 percent of Danone's
sales, difficulties in Russia and the loss of U.S. market share
were largely responsible for a sales slowdown in the second half
Dairy sales grew 3.8 percent in the first quarter, an
improvement from 3 percent growth in the fourth quarter.
This reflected a 3.9 percent rise in sales value and a 0.1
percent drop in volume, also an improvement from a 1.7 percent
volume drop in the fourth quarter.
In Russia and the United States, first-quarter sales
improved both in volume and value.
Russia, which accounts for 11 percent of Danone's sales and
is now the group's joint top market along with France.
Last year, Danone focused on improving margins and building
brands at its Unimilk business in Russia rather than growing
volumes in 2011, the first year since acquiring the business.
In the United States, booming demand for Greek yoghurt
caught Danone by surprise and took market shares from other
yoghurt categories. New capacity is coming onstream from June,
which should boost sales.
Danone shares have gained 6.2 percent this year, in line
with the Stoxx Europe 600 food and beverage sector.
($1 = 0.7656 euros)
(Reporting by Dominique Vidalon; Editing by Christian Plumb)