Trade Resources Company News Danone Is to Cut EUR200m in Costs From Its European Operations

Danone Is to Cut EUR200m in Costs From Its European Operations

Danone is to cut EUR200m (US$261m) in costs from its European operations in a bid to "win back its competitive edge" in the region after falling sales.

The French food giant said it would "adapt" its management structure in Europe and "reduce general and administrative costs".

Danone said the round of cuts, combined with with its ongoing "productivity programmes", would "free up resources to make Danone products and brands more competitive".

The announcement comes weeks after it emerged activist US investor Nelson Peltz had acquired a 1% stake in Danone.

US billionaire Peltz often invests in FMCG companies he feels are under-valued or can improve their performance.

In the last six years, he has bought shares in the likes of Heinz, Kraft Foods and the then Cadbury Schweppes, companies he believed needed to change strategy. Peltz is often credited as the catalyst for the split of Cadbury Schweppes, which led to the creation of stand-alone confectionery firm Cadbury.

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Danone prepares a plan to generate savings and regain its competitive edge in Europe To address a lasting downturn in the European economy and consumer trends that have led to a significant decline in its sales in the region, Danone is preparing a cost reduction and adaptation plan to win back its competitive edge.

The plan will be deployed over two years and is aimed at adjusting costs to this new context and generating savings of around euro 200 million in Europe. It will seek to reduce general and administrative costs for the group and its European subsidiaries, and adapt management organization in Europe, which was designed for a growth environment.

Combined with ongoing productivity programs, this plan will free up resources to make Danone products and brands more competitive.

At organizational level, the plan will address management structures and support functions. It will be based on voluntary measures and internal mobility will be the priority. This project will be submitted to Works Councils by March 2013.

About Danone

Danone is one of the fastest-growing food companies in the world. Its mission is to bring health through food to as many people as possible.

The group, whose products are sold on five continents, has more than 180 production plants and around 100,000 employees. In 2011, Danone generated sales of uoro 19 billion, of which more than half were in emerging markets. The group holds top positions in healthy food through four businesses: Fresh Dairy Products, Baby Nutrition, Bottled Water, and Medical Nutrition. Listed on Euronext Paris, Danone is a component stock of leading social responsibility indexes including the Dow Jones Sustainability Indexes, ASPI Eurozone and the Ethibel Sustainability Index.

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Danone to Cut Costs to Revitalise European Arm