By Dominique Vidalon
PARIS (Reuters) - Danone
The world's largest yoghurt maker, with brands including Actimel and Activia, is aiming to rebuild its position in China after an infant formula product recall in Asia last year.
Chief Financial Officer Pierre-Andre Terisse told journalists during a call that actions to boost sales in China, such as the launch of new Dumex infant formula brands, were "going in the right direction" but he declined to provide more details.
Danone kept its full-year sales and profitability goals, saying it was targeting a return to "strong, sustainable, profitable growth" from the second half.
Like-for-like group sales adjusted for currency effects and acquisitions grew 2.2 percent year-on-year in the quarter, a slowdown from 2.9 percent growth in the fourth quarter of 2013, 5:DANOid on Wednesday.
The performance was slightly better than the company-compiled average analyst estimates of 2.1 percent growth in group sales.
Total sales, which include the effects of foreign exchange fluctuations, reached 5.06 billion euros (4 billion pounds). Excluding currency effects the decline was 5.2 percent.
China contributes six percent of group sales but the maker of Bledina baby food, Evian and Volvic water and Activia and Actimel yoghurt faced a variety of problems there last year.
In August it had to recall infant formula products due to a health scare that began with concerns raised by New Zealand-based supplier Fonterra. A bacteria found by Fonterra turned out to be less harmful than feared. Danone is now suing the company for unspecified compensation.
5:DANOid that baby food sales fell 7.7 percent in the first quarter, an acceleration from a 6.9 percent decline in the fourth quarter 2013.
This however compared with a 9 percent decline in a company-compiled consensus Of analysts.
Elsewhere, dairy, which makes the bulk of 5:DANOles, posted year-on-year sales growth of 3.9 percent against 4.9 percent in the fourth quarter.
This reflected a 3.7 percent fall in dairy volumes and a 7.6 percent rise in prices. The volume decline came from price increases that started in the second-half of 2013 in response to higher milk prices, notably in Russia. Political unrest in Ukraine also hit revenues, although Ukrainian sales represent only 5 percent of CIS regional sales, Terisse said.
In the water division, sales rose 8.9 percent against 8.1 percent in the previous quarter, driven by robust demand in emerging markets.
Danone kept its 2014 target of like-for-like sales growth of 4.5-5.5 percent. It also stuck to a forecast for its 2014 operating margin to be stable within a range of 20 basis points lower to 20 basis points higher.
($1 = 0.7234 Euros)
(Reporting by Dominique Vidalon; Editing by James Regan and Andrew Callus)