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Danone posts higher sales, reaffirms recurring EPS guidance

French food company Danone said its consolidated sales for the third quarter increased 4.7% to €6.45 billion, compared with €5.54 billion in the same quarter of last year.

Danone said the 4.7% increase in sales was on a like-for-like New Danone basis, which takes into account the company's acquisition of U.S.-based consumer packaged food and beverage company WhiteWave in April. The company said its reported sales were up 16.6%.

"The increase in like-for-like sales has been underpinned by the allocation of additional resources to serve rising demand in Specialized Nutrition, especially in China," said CEO Emmanuel Faber.

Sales in the specialized nutrition division rose 17.8% year over year on a like-for-like New Danone basis to €1.84 billion, reflecting accelerated growth in China and progress in strategic priorities. Sales for the company's waters division increased 7.6% to €1.27 billion, reflecting a return to growth in China following the de-stocking transition period and continued growth momentum on all other platforms, Danone said.

The company said the sales from its essential dairy and plant-based international division were down 2.3% to €2.05 billion, primarily due to a double-digit fall in sales in Brazil, excluding which the division's sales were broadly flat. The North American essential dairy and plant-based division posted a 2.2% decline in sales to €1.29 billion.

For the full year 2017, Danone expects double-digit recurring EPS growth of more than 12% at a constant exchange rate, based on moderate sales growth and sustained recurring operating margin improvement on a like-for-like New Danone basis. The company expects a year-on-year mid-single-digit rise in the costs of its strategic raw materials.

Danone said it is targeting overall like-for-like sales growth of between 4% and 5% and a recurring operating margin of more than 16% in 2020. The company said it will focus on the decoupling of its mid-term growth and short-term efficiency agenda, the delivery of synergies following the acquisition of WhiteWave, and deleveraging its balance sheet, as part of its objectives for 2020.