Danone plans biggest shakeup in years with portfolio review

ZURICH • Danone SA CEO Emmanuel Faber is reviewing the French yogurt maker’s entire portfolio for underperforming assets as the shares languish near a six-year low.

The company is studying a sale of the Vega protein powder brand as well as a unit in Argentina, potentially getting rid of businesses that contribute €500 million (RM2.5 billion) to revenue. Faber said yesterday some divisions could cut 20% to 30% of the products they make. The stock rose as much as 2.8% in Paris.

Two weeks after raising €470 million by selling a stake in Japanese beverage maker Yakult Honsha Co Ltd, Faber is set to make even more divestments. That may become easier as the company shifts to a system of management focused on geography rather than product groups. Danone announced the measures yesterday as it reported a 2.5% drop in third-quarter revenue, on a like-for-like basis.

Danone has struggled for years amid a competitive grocery market in Europe, rising milk prices and upstart competitors, such as Chobani LLC in the US. The company has lost about a quarter of its market value in 2020. CFO Cecile Cabanis is leaving in the management shakeup.

“Danone is way behind the curve,” said Duncan Fox, an analyst at Bloomberg Intelligence. “It’s been several years of slow growth. The company may need to resort to larger asset sales across its categories for a year of transition in 2021.”

Faber said small brands, which were in vogue five years ago, have become less important. The company will also review factories, logistics, supplies and fleets in order to make them more efficient, the CEO said.

Juergen Esser, currently CFO of Danone’s bottled-water business, will replace Cabanis, who leaves in February after 16 years at the company.

“Today we are clear that we have the right categories,” Cabanis said in a call with reporters. “It will be a profound and granular review of assets.”

Danone said it’s naming Shane Grant as a regional CEO for North America and Veronique Penchienati-Bosetta as CEO for Europe and the rest of the world. Henri Bruxelles will become COO.

The company withdrew its guidance for this year in April as the slump in tourism and restaurants weighed on its bottled-water business. On Monday it gave a new forecast for a 14% recurring operating margin and €1.8 billion of free cashflow this year. — Bloomberg