Danone revenue expected to rise 5% to €22bn

French food group Danone is due to report full-year earnings tomorrow, with positive results expected.

Davy Stockbrokers said Danone has outperformed the STOXX 600 by approximately 20 per cent over the last 12 months. Davy analyst Cathal Kenny said the company's results will provide confirmation that 2015 was a year of progress and difference for Danone, with EBIT margins set to expand for the first time since 2009.

“Danone exited 2015 with strengthening credibility; another year of controlled growth should be reflected in continued share price relative outperformance.”

Davy has forecast Danone revenues to increase by 5.4 per cent year on year to €22.2 billion, with EBIT expected to rise 8.8 per cent year on year to €2.8 billion. The stockbroker said foreign exchange headwinds will more than offset underlying revenue growth, but margin development should lead to modest growth in reported EBIT.

This time last year, Danone reported 4.7 per cent growth in 2014 underlying sales to €21.4 billion, just above estimates of 4.5 per cent growth.

Danone, which makes Activia and Actimel yoghurt and Bledina baby food, has been seeking to rebuild its position in China after an infant formula product recall in 2013.

The food company is currently suing New Zealand’s leading dairy co-op Fonterra for more than €600 million after the health scare. An arbitration is to take place in Singapore after a false-alarm announcement in August 2013 that some Fonterra product used in infant formula and sports drinks may cause botulism.