Take a look at this apparently danone has interest in china..this PR from July..interesting parallels.
Danone's New Boss Looks to Revive Fortunes in China
Source: Dow Jones News
PARIS—When it comes to dealing with problem units in China, Danone SA has a tried and tested playbook: shed them.
The French maker of Activia yogurt and Aptamil baby milk said last week it was calling time on efforts to revive its flagship infant formula unit and would instead buy a larger stake in state-linked milk producer China Mengniu Dairy Co. and focus on e-commerce.
The change in China is one of the company's first big strategic moves as Chief Executive Emmanuel Faber, who took the reins of the French dairy group in October last year, tries to return Danone to sustainable growth.
"What we're doing is a revolution," Mr. Faber said, in an interview after the company announced its first-half earnings Friday. "It's a slow revolution, but it's still a revolution."
Mr. Faber, along with former long-standing chief executive-turned-chairman Franck Riboud, is pushing to build more solid growth for the company, after a series of problems including a food-safety scare in Asia, milk-price inflation and the effects of the economic crisis in Europe.
Danone has been the object of much speculation, with some analysts saying it lacks scale to compete with bigger rivals. With a market capitalization of roughly €40 billion, or about $44 billion, it is much smaller than Nestlé SA, which has a market capitalization of about €220 billion.
The company last year considered selling its medical-nutrition business in order to raise funds to build out its other units. Mr. Faber eventually decided against a sale, saying the unit would be profitable in the coming years and was a key part of Danone's portfolio.
"We don't today have a problem with our overall size," Mr. Faber said. "The question we've always asked ourselves is how competitive we are in each of our individual sectors? I am convinced that we have a long story still to write with medical nutrition and I won't revisit that decision."
Despite being a big growth engine for Danone, the Chinese business in particular has faced a number of issues in recent years. Mr. Faber knows the country well, having been sent to China by Mr. Riboud in 2007 to solve problems related to its joint venture with its Chinese partner at the time, Wahaha.
Danone at the time accused the firm of secretly running a set of parallel companies selling almost identical products. Wahaha denied the allegations, and Danone eventually solved the issue by selling off its majority stake in the venture.
The company last week said it would swap its flagship Dumex baby-formula brand for an additional stake in Chinese dairy giant Mengniu, bringing its total shareholding to around 12%. The decision followed a massive food-safety scare from its key supplier that prompted the recall of thousands of cans of Dumex baby formula across eight Asian markets in 2013.
The scare turned out to be a false alarm but Danone struggled to rebuild confidence in the once powerful brand.
Mr. Faber says its new strategy in China is to focus on e-commerce while still playing a part in the consolidation of a highly fragmented infant formula market.
"We are reinventing our business in China," Mr. Faber said. The country contributes around 7% of group turnover.
Danone's move comes as Chinese consumers are stampeding online. An estimated 461 million Chinese consumers, a third of the population, are now shopping online, up from 46 million in 2007, when e-commerce started gaining momentum.
Internet giants like Alibaba Group Holding Ltd. are opening special import sections of their sites, enabling consumers to buy goods from all over the world at discount prices. That has buoyed competition significantly for foreign baby-formula makers, hurting sales of some brands that were once profitable in China.
Turning around Danone's fresh dairy unit, representing around half of the company's revenue, is another hefty challenge. The rise in the price of milk in the last two years has hit Danone hard. Bernstein analyst Andrew Wood says it is "very possible" that Danone could continue to see the business contract this year.
Mr. Faber said there was "no reason" the fresh dairy division wouldn't deliver the same margins as the rest of the group following the restructuring. The group in 2014 reported an operating margin of 12.6%, down from 15.3% in 2010. "We've talked of sustainable growth for the entire group so we're going to grow this, and the dairy unit will contribute," Mr. Faber said.
Before last year, Danone had only had two chief executives, both from the same family.
Mr. Riboud handed over the day-to-day running of the business last year to Mr. Faber in order to dedicate his time to crafting the future of the company. Mr. Faber, who joined Danone 17 years ago as head of finance, strategies and information systems, said he still talks to Mr. Riboud every day.
"I'm only the third chief exec in 60 years so I take this as a huge responsibility," Mr. Faber said.
Danone on Friday reported lower profit for the first half first in part due to an impairment charge related to Dumex. Net profit fell to €416 million from €608 million a year earlier. The company said sales in the second quarter rose 9.5% from a year earlier to €5.9 billion. Stripping out currency and other effects, sales were up 4.5% for the period.
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Danone's New Boss Looks to Revive Fortunes in China
Source: Dow Jones News
PARIS—When it comes to dealing with problem units in China, Danone SA has a tried and tested playbook: shed them.
The French maker of Activia yogurt and Aptamil baby milk said last week it was calling time on efforts to revive its flagship infant formula unit and would instead buy a larger stake in state-linked milk producer China Mengniu Dairy Co. and focus on e-commerce.
The change in China is one of the company's first big strategic moves as Chief Executive Emmanuel Faber, who took the reins of the French dairy group in October last year, tries to return Danone to sustainable growth.
"What we're doing is a revolution," Mr. Faber said, in an interview after the company announced its first-half earnings Friday. "It's a slow revolution, but it's still a revolution."
Mr. Faber, along with former long-standing chief executive-turned-chairman Franck Riboud, is pushing to build more solid growth for the company, after a series of problems including a food-safety scare in Asia, milk-price inflation and the effects of the economic crisis in Europe.
Danone has been the object of much speculation, with some analysts saying it lacks scale to compete with bigger rivals. With a market capitalization of roughly €40 billion, or about $44 billion, it is much smaller than Nestlé SA, which has a market capitalization of about €220 billion.
The company last year considered selling its medical-nutrition business in order to raise funds to build out its other units. Mr. Faber eventually decided against a sale, saying the unit would be profitable in the coming years and was a key part of Danone's portfolio.
"We don't today have a problem with our overall size," Mr. Faber said. "The question we've always asked ourselves is how competitive we are in each of our individual sectors? I am convinced that we have a long story still to write with medical nutrition and I won't revisit that decision."
Despite being a big growth engine for Danone, the Chinese business in particular has faced a number of issues in recent years. Mr. Faber knows the country well, having been sent to China by Mr. Riboud in 2007 to solve problems related to its joint venture with its Chinese partner at the time, Wahaha.
Danone at the time accused the firm of secretly running a set of parallel companies selling almost identical products. Wahaha denied the allegations, and Danone eventually solved the issue by selling off its majority stake in the venture.
The company last week said it would swap its flagship Dumex baby-formula brand for an additional stake in Chinese dairy giant Mengniu, bringing its total shareholding to around 12%. The decision followed a massive food-safety scare from its key supplier that prompted the recall of thousands of cans of Dumex baby formula across eight Asian markets in 2013.
The scare turned out to be a false alarm but Danone struggled to rebuild confidence in the once powerful brand.
Mr. Faber says its new strategy in China is to focus on e-commerce while still playing a part in the consolidation of a highly fragmented infant formula market.
"We are reinventing our business in China," Mr. Faber said. The country contributes around 7% of group turnover.
Danone's move comes as Chinese consumers are stampeding online. An estimated 461 million Chinese consumers, a third of the population, are now shopping online, up from 46 million in 2007, when e-commerce started gaining momentum.
Internet giants like Alibaba Group Holding Ltd. are opening special import sections of their sites, enabling consumers to buy goods from all over the world at discount prices. That has buoyed competition significantly for foreign baby-formula makers, hurting sales of some brands that were once profitable in China.
Turning around Danone's fresh dairy unit, representing around half of the company's revenue, is another hefty challenge. The rise in the price of milk in the last two years has hit Danone hard. Bernstein analyst Andrew Wood says it is "very possible" that Danone could continue to see the business contract this year.
Mr. Faber said there was "no reason" the fresh dairy division wouldn't deliver the same margins as the rest of the group following the restructuring. The group in 2014 reported an operating margin of 12.6%, down from 15.3% in 2010. "We've talked of sustainable growth for the entire group so we're going to grow this, and the dairy unit will contribute," Mr. Faber said.
Before last year, Danone had only had two chief executives, both from the same family.
Mr. Riboud handed over the day-to-day running of the business last year to Mr. Faber in order to dedicate his time to crafting the future of the company. Mr. Faber, who joined Danone 17 years ago as head of finance, strategies and information systems, said he still talks to Mr. Riboud every day.
"I'm only the third chief exec in 60 years so I take this as a huge responsibility," Mr. Faber said.
Danone on Friday reported lower profit for the first half first in part due to an impairment charge related to Dumex. Net profit fell to €416 million from €608 million a year earlier. The company said sales in the second quarter rose 9.5% from a year earlier to €5.9 billion. Stripping out currency and other effects, sales were up 4.5% for the period.
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Visit http://www.companyspotlight.com/partner?cp_co...6410694060
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