The French agro-foods group Danone has reported 1996 net profits up 8% to FFr 3.4 billion (US$ 610 million), in the first full set of results since Mr. Franck Riboud took over as chairman from his fat…
The French agro-foods group Danone has reported 1996 net profits up 8% to FFr 3.4 billion (US$ 610 million), in the first full set of results since Mr. Franck Riboud took over as chairman from his father last May. The figures were above those predicted by the group last year and came in spite of disappointing summer weather in Europe which hit sales of mineral water, beer and other products. Mr. Riboud said he had made a series of changes since he took charge of the company. These included breaking down the barriers between its divisions; accelerating its international development; focusing on a core group of products; emphasising the Danone brand worldwide; and introducing new incentives for managers who would increasingly be paid on the basis of return on investment in their business divisions. He said he planned to open a research centre for the group to analyse consumer trends, while adding that he was satisfied with the level of overall spending on development – about 0.8% of annual sales. Mr. Riboud said he believed the 6-8% spent on marketing and promotion of its brands was at the correct level, and that any proposal to reduce advertising expenditure must in future be submitted to senior directors for approval. He said the group would concentrate on four to five international brands and a further 10 in local markets. He added that its aim was to be the best-known brand in its principal markets, or number two in specific niches. Danone“s debt rose as a result of a series of acquisitions last year by FFr 4 billion to FFr 20 billion. Sales increased 6% to FFr 84 billion during 1996, or by 3% on a comparable basis. Mineral water sales in Europe fell by more than 2%, but retained the highest margins at nearly 14%. Mr Riboud said that the group“s new crushable bottle – designed to ease disposal – had helped it boost market share in France by 1.5 percentage points.