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Danone cautious on 2015 sales, profit growth

French food group Danone made a cautious 2015 sales and profitability growth forecast on Friday as it grapples with deflation in Europe, weakening currencies in emerging markets and difficulties in Russia, its top market.

The world's largest yoghurt maker predicted that its 2015 operating margin would rise slightly, having fallen 60 basis points to 12.59 percent in 2014, in line with a company-compiled consensus of analysts for 12.60 percent.

Danone buys YoCrunch.
Source: YoCrunch
Danone buys YoCrunch.

It also said it expected underlying sales to rise by between 4 and 5 percent this year.

"Danone assumes that economic conditions will remain difficult and unstable overall, with fragile or even deflationay consumer trends in Europe, emerging markets undermined by volatile currencies, and difficulties specific to a few major markets, particularly CIS," the company said in a statement.

The maker of Activia and Actimel yoghurt, Evian water and Bledina baby food said underlying sales in 2014 grew 4.7 percent to 21.444 billion euros ($24.36 billion), helped by recovering baby food sales in Asia. This was slightly above estimates of 4.5 percent growth.

Danone, which competes with Nestle and Unilever, has been seeking to rebuild its position in China after an infant formula product recall in Asia in 2013.

Fourth quarter sales at its baby food division rose 28.1 percent, helped by favourable year-ago comparisons. Sales in Asia were now back to pre-crisis levels, the statement said.

In China, the market that was the hardest hit, sales of Dumex baby formula products however continued to lag expectations but sales of premium formula products rose sharply.

In austerity-hit Europe, the maker of Activia yoghurt and Evian water, has been hit by sluggish consumer demand and a spike in milk prices in Russia, its number one contributor to group sales.