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French food group Danone eyes return to sales growth in Q2

PARIS, Feb 19 (Reuters) - Danone said 2021 would be a year of recovery with sales back to growth from the second quarter, and a return to profitable growth in the second half after the coronavirus crisis hit the French food group’s 2020 sales and profits.

Chairman and CEO Emmanuel Faber, who finds himself under growing pressure as activist shareholders push for management changes amid criticism of weak returns, said Danone “fully recognize that our share price is not where we would like it to be” and said he was open to dialogue with shareholders.

Danone, which is the world’s largest yoghurt maker, said its 2021 recurring operating margin would broadly in line with the 14% of sales achieved in 2020, although it warned that the first quarter would still be tough.

Danone made the forecast after it reported 2020 like-for-like sales fell 1.5%, which was slightly better than analysts’ estimates in a company-compiled consensus for a 1.6% decline.

The maker of Evian and Badoit bottled water said this reflected a fall in water sales to the restaurant sector during government-enforced lockdowns. Coronavirus travel restrictions in Asia also weighed on the sales of infant formula.

The 2020 operating margin declined by 150 basis points on a like-for-like basis to 14% of sales, in line with company’s guidance and analysts’ expectations of a 14% margin.

Swiss rival Nestle on Thursday posted organic sales growth of 3.6% and an operating margin of 17.7% of sales for 2020. (Reporting by Dominique Vidalon; Editing by Sudip Kar-Gupta)

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