By Ruth Bender
PARIS--French dairy giant Danone SA (BN.FR) Friday said the
group will still deliver its growth and margin targets this year
even though baby food sales will be dented this quarter by the
recent scare over Fonterra Co-Operative Group Ltd. products.
Danone said the recall of some of its infant formula products in
eight Asian markets this month following a warning that some of
Fonterra's products may contain clostridium botulinum, a bacteria
that can cause botulism, have had a "significant impact" on the
group's Asian baby nutrition division.
"The division's third-quarter sales will be down, but despite
this, our Group is on track to deliver organic growth of around 5%
this quarter," Chief Financial Officer Pierre-Andre Terisse said in
a statement.
Danone said it is working on restoring sales in affected markets
and confirmed it will still reach its full-year targets.
Danone aims to reach organic sales growth of at least 5% this
year and expects its profit margin to decline by between 0.3 and
0.5 percentage points.
In early August, Fonterra said some of its products may contain
clostridium botulinum, a bacteria that can cause botulism, but that
there were no reports of illness related to the whey protein. The
announcement came after the company's intensive testing of the
products, which were produced in May 2012. Fonterra later recalled
them in a raft of places, including China, and the scare led to
trade bans on New Zealand dairy products by Russia and some other
countries.
The group said it welcomes the findings from New Zealand's
government, which said on Wednesday that the global recall earlier
this year of some Fonterra dairy products was unnecessary.
"None of the many tests conducted by the group, both before and
after this critical period, showed any contamination whatsoever of
its products with Clostridium botulinum," Danone said in a
statement.
Write to Ruth Bender at ruth.bender@wsj.com
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