French food producer Danone said its sales growth this year will be slower than it had predicted earlier on a worse-than-anticipated performance of its European dairy business.
It said demand declined for its Activia yogurt brand and continued economic woes in Spain weighed on its performance. “In the 4th quarter, Activia’s performance as well as aggravated market conditions in Spain have impacted Europe dairy results,” the company said on Monday.
Danone said it now expects 2016 sales growth to be “slightly below target.” It originally forecast 3% to 5% sales growth. It didn’t give a new percentage estimate for sales growth this year. It said, however, its recurring operating margin will improve more than expected as a result of cost cutting and “disciplined resource allocations” amid an “increasingly volatile and complex environment.” Its previous target for an improvement was in a range of 50 basis points and 60 basis points.