Danone's profits curdled by Morocco boycott

PARIS — A consumer boycott on Danone products in Morocco contributed to the French food giant's profits and sales sinking last year, it said on Tuesday.

The world's largest yoghurt maker said in a statement that its net profit fell by 4.1 per cent to 2.35 billion euros ($2.65 billion) in 2018.

Sales dropped by 2.1 per cent in the last three months of the year, driven by a 35 per cent plunge in Morocco, where there has been unprecedented boycott campaign over high prices against Danone milk and two other well-known brands since April.

The boycott's impact in 2018 "on total net sales was a decrease of -178 million euros (-$201 million) versus 2017 net sales, of which around two thirds come from losses in milk sales, and one third from losses in dairy products", the company said in a statement.

Chief financial officer, Cecile Cabanis, said in a conference call that there was still a market share for Danone's products in Morocco, but she did not expect to return to growth there before the end of 2019.

The boycott campaign against the high cost of living in Morocco spread like wildfire online last year, calling on Danone milk, Afriquia service stations and Sidi Ali water — the leaders in their sectors — to lower their prices.

Despite the boycott, the company said its full-year reported sales were down just 0.7 per cent.

It benefited from sales of dairy products stabilising in Europe, growing strongly in the CIS region that includes most ex-Soviet countries and also improving in Latin America.

In North America, sales in the "essential dairy and plant-based" food products division surged by 12.2 per cent to five billion euros.

Sales of infant formula products fell in China, but Cabanis said the decline was slowing, dropping from 20 per cent in the third quarter to 10 per cent in the fourth.

Looking ahead to the current year, Danone is aiming for like-for-like sales growth of 3 per cent and an operating margin above 15 per cent. 

Following the announcement, the company's share price bumped upwards by 0.3 per cent in morning trading in Paris.