* 2012 sales 20.87 bln euros vs 20.75 bln forecast
* Operating profit margin down 50 bps to 14.18 pct in 2012
* Sees 2013 operating profit margin down by 30-50 bps
* Shares biggest gainer of European blue-chips
(Adds Trian no comment, CEO and CFO quotes)
By Dominique Vidalon
PARIS, Feb 19 Danone said it will cut
around 900 jobs to cope with the downturn in southern Europe
that is hurting its core dairy business and aims to return to
more profitable growth next year.
The world's largest yoghurt maker is more exposed to the
euro zone debt crisis than rivals Nestle and Unilever
and is under pressure from U.S. activist shareholder
Nelson Peltz to improve its performance.
Chief Executive Franck Riboud asked shareholders to give him
more time to revive Danone's dairy division, its slowest-growing
business that accounts for nearly half of group profit.
"We are doing our job. We are industrialists and only
industrialists," he told a news conference on Tuesday.
The French company said it would focus on product
innovation and renewal to justify the brand premium its dairy
products such as Activia and Actimel yoghurt command over
"Abandoning our European pillar is out of the question. We
must fix Europe, and the goal is to boost volumes, and then
margins will follow," Riboud said.
Danone predicted that its group operating profit margin
would drop by between 30 and 50 basis points this year, having
fallen 50 basis points to 14.18 percent in 2012.
"I hope that Danone's margin will resume growth in 2014 and
that we will return to the (sales) growth levels we are used
to," Riboud said.
The job cuts, around 3.3 percent of the Danone's European
workforce, will be made over two years and are part of a wider
plan to save 200 million euros..
This entails cutting management and administrative
functions and does not involve plant closures.
In December, Danone had a global workforce of 102,000,
including 27,000 in Europe.
SALES GROWTH LAG RIVALS
Danone shares climbed 5.3 percent, the biggest gainer on the
FTSEurofirst 300 index of European blue-chip stocks,
after fourth-quarter sales rose more than forecast.
The maker of Evian water and Bledina baby food said
underlying 2012 sales rose 5.4 percent to 20.87 billion euros,
above analysts' forecasts of 20.75 billion euros compiled by
Thomson Reuters I/B/E/S.
But sales growth, at the low end of Danone's own 5-7 percent
forecast range, lagged the 5.9 percent achieved by Swiss rival
Nestle and the 6.9 percent by Britain's Unilever.
Danone has set a goal of underlying sales growth of at least
5 percent for this year.
The dairy division posted a sales rise of 2 percent in 2012
against double-digit growth for water and baby nutrition.
Dairy sales have fallen by 10 percent in Spain, Italy, and
Portugal - all in recession - since the third quarter, finance
chief Pierre-Andre Terisse said. There had been zero growth in
France, he added, warning that the first quarter would be
Danone has started to cut its prices, notably in Spain, in
response to falling demand.
The company, which has around 38 percent of sales in western
Europe, is more exposed to the region's debt crisis than other
large food groups that have more of their business in
faster-growing emerging markets.
Danone shares trade at 15.9 times estimated 2013 earnings,
at a discount to Unilever's 18 times and Nestle's 18.1 times.
Trian Fund Management LP, Peltz's U.S. investment firm that
owns 1 percent of Danone, declined to comment on its results.
Peltz, a billionaire businessman who often challenges
companies he considers undervalued or poorly managed, has said
he supports Danone's management.
But he has argued that improvements are possible through
boosting operating margins, cutting more costs and abstaining
(Reporting by Dominique Vidalon; Editing by Erica Billingham)