DANONE PARIS (Reuters) - French food group Danone (>> DANONE) forecast a further improvement in sales and profit this year, but warned economic conditions would remain volatile and uncertain in emerging markets such as China, Russia and Brazil.
The maker of Activia and Actimel yoghurt said on Tuesday cost cuts, as well as an improving dairy business in Europe and baby food business in Asia, would help to lift its trading operating margin in 2016.
Danone shares were up 1.8 percent in early trading, the top performers on the French blue-chip CAC 40 index <.FCHI>.
The company, which also owns the Evian water and Bledina baby food brands, said it expected underlying sales to rise between 3 and 5 percent this year. They grew 4.4 percent to 22.41 billion euros (£17.52 billion) in 2015.
Last year, Danone had predicted a 4 to 5 percent rise in 2015 sales. "Economic conditions will remain volatile and uncertain overall, with fragile or even deflationary consumer trends in Europe, emerging markets undermined by volatile currencies, and difficulties in specific markets, in particular Russia, China and Brazil," the company said.
This followed similarly cautious comments from rivals.
Unilever (>> Unilever plc) (>> Unilever) has said it is preparing for tougher markets and more volatility in 2016, while Switzerland's Nestle (>> Nestle SA) said it was getting harder to raise prices in a tough economic environment
In recent years, Danone has faced problems including a weak economy in Europe and a food safety scare in Asia in 2013 that hit one of its key growth drivers, baby food in China.
Emmanuel Faber, who took over as CEO in October 2014, has vowed to return Danone to "strong profitable and sustainable growth" by 2020, reviewing its business in China and overhauling its dairy division where it has cut costs and launched new products to counter weak consumer spending in Europe. Danone's operating margin gained 17 basis points like-for-like in 2015 to 12.91 percent, in line with the company-compiled consensus of analysts' expectations of 12.93 percent.
(Reporting by Dominique Vidalon; Editing by James Regan and Mark Potter)
