(Corrects seventh par to show $110 mln in fines relate to six
companies, not only Danone; repeats to reformat cross-reference
to related item)
* Baby nutrition sales to fall in Q3 after Asian recall
* Danone group on track for about 5 pct sales growth in Q3
* Expects to meet 2013 targets for sales growth and margin
* Shares fall 1.5 percent, warning highlights Asian woes
By Dominique Vidalon
PARIS, Aug 30 Danone said it expects
to meet group sales targets in the third quarter as well as
growth and margin forecasts for 2013 despite a product recall in
Asia having a "significant impact" on baby nutrition sales.
Sales of baby food, at 20 percent its No. 2 revenue
contributor after dairy, will fall in this quarter, Danone said,
after a food scare forced the recall of infant formula products
in Asia, where it is trying to offset sluggish demand in Europe.
The world's No. 1 yoghurt maker is expanding in fast-growing
markets in Asia, notably China, where previous food-safety
scares have boosted demand for foreign baby milk formula.
On Thursday, Danone's Nutricia unit said it was considering
legal action against New Zealand's Fonterra after
incorrect tests by the maker of Karicare milk formula prompted a
global food safety scare and a number of product recalls.
Danone had recalled selected infant formula products as a
result of the Fonterra tests from New Zealand, Singapore,
Malaysia, China, Hong Kong, Vietnam, Cambodia and Thailand as a
precautionary measure. The warning was lifted on Aug. 28.
In Paris, a Danone spokeswoman stressed that Fonterra, which
supplies around 16 percent of the milk ingredients of Danone's
baby food division, remained an "important" supplier.
Danone's recent woes in China include being one of six
companies fined a combined $110 million for price-fixing and
anti-competitive behaviour this month.
"I just observe that their China baby milk business is not
doing much to help Danone out of their problems. One minute it's
going gangbusters and the next minute there's a pricing problem,
then a food contamination problem," one analyst said.
Pierre-Andre Terisse, Danone's finance chief, said in a
statement that action to restore sales in the affected markets
would help it hit third-quarter organic sales growth of about 5
percent and its growth and margin targets for the full year.
Restoring sales and consumer trust would include
communication campaigns but it was too early to detail the cost
of the recall procedures and efforts to lift sales, Danone said.
By 1328 GMT, Danone shares were down 1.5 percent,
underperforming the European sector.
Natixis analyst Pierre Tegner, who forecasts sales growth of
5.8 percent for the third quarter, said the statement was a
"warning" which challenged the "premium the stock has built in
Danone shares have gained 14.7 percent this year compared
with 4 percent for the regional food and beverages sector.
(Additional reporting Martinne Geller in London and James Regan
in Paris; Editing by Louise Ireland and David Goodman)