Evian maker Danone sees $109-million hit from coronavirus in Q1 2020
PARIS, France – French food giant Danone said Wednesday, February 26, it expects to take a 100-million-euro ($109-million) hit in 1st quarter sales from the coronavirus outbreak, particularly in China, its 2nd largest market.
"The company currently estimates...around 100 million euros [in] lost sales," mostly in its waters business in China, said Danone, whose brands include Evian and Volvic.
That meant overall sales in the first 3 months of the year were expected to be "broadly flat," compared to the 6.1 billion euros it booked in the 1st quarter of 2019, it said in a statement.
"Danone assumes that economic conditions in 2020 will remain particularly volatile and uncertain overall...with additional pressure on the world economy since the beginning of the year related to the COVID-19 outbreak." (READ: Coronavirus is 'new layer of uncertainty' for European economy)
As a result, Danone said it would downgrade its forecast for earnings this year.
Earnings per share growth was expected to be "mid-single-digit" or around 5%, "reflecting sales growth of 2% to 4% and a recurring operating margin above 15%, as we accelerate investment and factoring in the assessment to date of the impact of coronavirus outbreak," it said.
Danone said that business last year had been "strong," with group sales growing 2.6% to 25.3 billion euros ($27.5 billion).
Underlying or operating profit grew 18.1% to 3.2 billion euros, although bottom-line profit fell 18% to 1.9 billion as a result of one-off charges. – Rappler.com