French food group Danone pledged to step up investments behind its brands and actively rotate its asset portfolio, as it seeks to boost revenue in a new strategy plan led by new boss Antoine de Saint-Affrique.

Saint-Affrique, who took over as chief executive of the world’s largest yogurt maker in September, said in a statement ahead of an investor meeting that the “Renew Danone” plan was “all about creating the conditions for sustainable and competitive growth and then delivering consistently in a way that creates value for all.”

The consumer goods giant, which owns Evian and Badoit water and Activia yogurt, said it now expected its operating profit margin to fall to above 12% in 2022 from 13.7% achieved in 2021, with like-for-like sales growth in a range of 3-5% against 3.4% in 2021.

This assumed the reinvestment of 100% of its Local First savings, a productivity higher than last year and a low to mid-teens level of input cost inflation.

For the 2023-2024 period, Danone set a goal for profitable growth. It targeted like-for-like sales growth between 3% and 5% with a recurring operating income growing faster than like-for-like net sales.

Saint-Affrique’s main challenge is to boost sales across the group’s three businesses – dairy and plant-based products, infant formula and bottled water.

Danone also faces mounting input costs, coupled with further uncertainties caused by Russia’s invasion of Ukraine, which has forced Danone to suspend investments in Russia.

Saint-Affrique replaced Emmanuel Faber who was abruptly ousted as chairman and CEO last year following clashes with some board members over strategy and calls from activist funds for him to resign over the group’s lackluster returns compared with some rivals.

Source : Financial Post March 8 2022 (Reporting by Dominique Vidalon; Editing by Sudip Kar-Gupta)