Danone Announces Plans to Reduce Its Business Portfolio

Danone will sell some of its businesses as it posted a 2.5 percent drop in third-quarter on a like-for-like basis.

Multinational food company Danone looks into divesting some of its businesses. It comes as shares for the company hit a six-year low, Bloomberg reported. Upon the announcement, on Monday its shares climbed by over two percent.

‘Pruning’ Portfolio

CEO of Danone, Emmanuel Faber, said that the company plans to sell some of its assets. Danone will trim its portfolio by letting go of some of its underperforming businesses. The move comes as it reported a 2.5 percent drop in third-quarter sales on a like-for-like basis, Market Watch said

“We would look at assets that don’t move the needle for Danone because they’re too small or would require to double in size locally,” Faber told Bloomberg. “So, someone else might be a better owner.”

Businesses for Sale

Particularly, it looks into divesting its Vega business, which produces plant-based protein powders. Additionally, it also looks to sell a unit in Argentina worth 500 million euros (around US$592 million). Faber noted that there are also some units that could reduce production by 20 percent to 30 percent. Previously, the company had also said it wanted to sell its remaining stake in Yakult.

According to Faber, some of their small brands have become less important. It will look into its operations, like its facilities and logistics, to be more efficient. 

Management Shakeup

However, the chief executive noted that it will not let go of the company’s existing categories. In particular, they include bottled water, dairy, and specialized nutrition. Faber told Bloomberg, “It took us more than ten years to assemble this portfolio of categories, and there’s a clear cohesiveness.”

Meanwhile, the company also announced a change in CFO by next year. Chief financial officer Cecile Cabanis will leave the firm after 16 years with Danone. Her replacement will be the current chief financial officer of its bottled water unit, Juergen Esser. Moreover, it also appointed Shane Grant for the regional CEO position in North America.

Meanwhile, Veronique Penchienati-Bosetta will preside as chief executive officer for European operations and other parts of the world. Furthermore, the chief operating officer position will go to Henri Bruxelles.

Phillip Malone

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