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Danone third-quarter sales growth slows with China baby food, Mizone

Danone stock price will see some pressure: Pro

Danone posted a slowdown in underlying third-quarter sales growth on Tuesday, as regulatory changes in China weighed on its infant formula sales and de-stocking of the Mizone water in China continued.

The French food group said its dairy sales remained negative in Europe despite the relaunch of its Danonino and Activia brands, but medical nutrition sales were strong. The company reiterated its full-year guidance.

The world's largest yogurt maker, whose brands include Actimel and Activia, said third-quarter sales reached 5.537 billion euros ($6.20 billion), with like-for-like growth of 2.1 percent against 4.1 percent in the second quarter.

The performance came below the company-compiled average of analyst estimates of 2.2 percent growth in group sales. In July, Danone had already flagged that in Europe, indirect demand from Chinese consumers buying baby formula online was declining due to changes in the Chinese regulatory environment.

For 2016, Danone kept its targets of like-for-like sales growth of between 3 percent and 5 percent, and a rise in its operating margin of 50 to 60 basis points from 12.91 percent in 2015.