French food group Danone is sticking to its goals after a weak start until 2021

Danone (DANO.PA) on Tuesday stuck to its goal of returning to profitable growth in the second half of 2021, after recording sales in the first quarter of 3.3%, while blockades of COVID-19 continued to slow down the sale of bottled water and baby food.

The French food group, which is looking for a new CEO, said it is pushing for a gradual reopening of economies from the second half of this year as vaccination programs against COVID-19 are launched.

Former boss Emmanuel Faber was abruptly ousted as president and CEO last month after clashes with some board members over strategy and calls from activist funds to resign over the group’s unclear return to some rivals. read more

Danone did not elaborate on the search for a new CEO, but said he would pay “careful attention to ensuring a proper transition”. Earlier, it said it was looking for an external candidate after appointing a duo to manage operations on a temporary basis.

The company also said it would continue changes supported by Faber to reorganize Danone around regional hubs, not brands, in line with the “Local First” plan.

He reiterated his expectations for a return to second-quarter similar sales growth and an operating margin for the full year 2021, largely in line with the 14% achieved in 2020.

Danone, the world’s largest yogurt maker, said sales of “like-like” fell 3.3% to 5.657 billion euros ($ 6.82 billion) in the first quarter, compared with expectations for a 3.7% drop in the consensus companies of 19 analysts.

The increase in sales of basic dairy and plant products of 1.6% was mainly offset by a decrease in sales of water of 11.6% and a decrease in sales of 7.7% in sales of specialized food.

Infant food sales continued to be affected by the slowdown in birth rates and COVID-related disorders in China, especially cross-border sales fell by about 45%.

During Faber, the company pursued a strategy aimed at diversifying into fast-growing products containing probiotics, proteins and plant-based ingredients to mitigate the slower growth of dairy products.

However, the pandemic has complicated the prospects for the company, which has suffered as sales of products such as Evian bottled water to the restaurant sector have declined during government-implemented locks.

“We would expect this release to support stock price performance until we get more news about the new CEO before the summer,” Citi analysts wrote in a note.

Shares of Danone were 0.7% lower in early trading, at 59.91 euros. They have gained 12% so far this year, aided by speculation about activist shareholder intervention and after falling 27% last year. The shares outperformed their European sector (.SX3P), which has lost 7.6% so far this year.

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