Wide Angle

Danone Group achieves annual financial goals, despite Morocco boycott

Despite a consumer boycott in Morocco, Danone Group said that its first-half net income rose. The viral campaign was launched in April and targeted two other big companies in the Kingdom.

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After having its revenue growth slowdown in the second quarter of 2018 because of a viral boycott campaign in Morocco, French multinational food-products corporation Danone managed to achieve its annual financial goals, reports Reuters on Friday.

Danone said on July 27th that its first-half net income grew 24% year-on-year. It indicated that net income was 1.2 billion Euros, surpassing its estimates limited to 1.12 billion Euros.  

The company reports that sales in the first half were 12.5 billion Euros, rising by 4% on a new like-for-like basis, says the same source. In general, «Danone’s first-half operating profit reached 1.784 billion Euros, a like-for-like rise of 7.9 percent, which was in line with a company-compiled median of analyst estimates for 1.785 billion Euros in profit», says Reuters.

However, in Morocco, the subsidiary saw its sales drop by 40 percent in the second quarter. The company’s operating income was hit by the consumer boycott which is targeting, since April, two other firms, as a way of protesting against the high cost of living.

The Morocco boycott

Commenting on the situation in the North African Kingdom, Danone said last month that it lost 50 percent of its market share in fresh milk.

«We are entering the second half with an operating model capable of offsetting these headwinds», promised Danone’s chief financial officer Cecile Cabanis.

Despite the positive results, the Moroccan boycott remains one of the campaigns that marked the French company's subsidiary this year. Boycotters targeted three major companies, including the country’s leading fuel distributor Afriquia SMDC and mineral water company Oulmes which issued a profit warning, impacted by the viral campaign.

To overcome the crisis, Danone Chief Executive Emmanuel Faber said he respects «the choice of Moroccans who have decided to no longer buy the brand», but mentioned he deeply regretted that.

In May, Central Danone listed in the Casablanca Stock Exchange issued a profit warning, advising the stock market that profits will be lower than expected in 2018. The company has even reduced its raw milk purchases by 30% on May the 29th and terminated several short-term agency contracts.

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