French food giant Danone today warned that it is being hit by the financial crisis in Southern Europe, an admission that suggests rivals such as Unilever and Procter & Gamble must also be suffering.
The world’s largest yoghurt maker, with brands including Actimel and Activia, said Spanish consumers in particular are cutting back, forcing it to issue what is in effect a profits warning. The company is also being buffetted by increases in the costs of raw materials such as milk and packaging.
Its profit margins will fall by 50 basis points, or 0.5%, in 2012. Danone previously expected a “stable” margin.
In response, the shares fell by 4% in Frankfurt. Unilever shares tumbled 43p to 2043.5p, the biggest footsie faller, as the City digested the news.
Chief financial officer Pierre André Terisse said that Danone planned to respond to declining consumption in Southern Europe with price cuts, but that it was too early to provide details. He said demand in Asia, the Americas, Russia and the Middle East remained robust.
Danone brands also include Bledina baby food and Evian and Volvic water.
“While I am not surprised about the deterioration in southern Europe and assume Spain, Italy and Greece combined are around 10 percent of its sales, I am surprised that it talks about higher commodity costs,” Jon Cox, an analyst at Kepler Capital Markets in Zurich, told Bloomberg.
