Dive Brief:
- Danone said its operating profit fell 10% in the first half of the year, a more substantial drop than analysts had forecast.
- The world's largest maker of yogurt put much of the blame on a continuing surge in the cost of milk in Europe, which has pushed up the company's expenses and hurt its sales.
- Sales fell 5.3% across the globe as the company continues to struggle to regain market share in Asia after a false-alarm contamination scare prompted a massive recall of baby formula.
Dive Insight:
The really bad news here for Danone is that it looks like the numbers from the first-quarter, which suggested that the company had turned a corner in Asia, were misleading. In fact, the second quarter numbers are generally worse than the first quarter figures -- the drop in yogurt sales, for example, doubled to 7.4% from 3.7%.
All this puts pressure on Danone to do something big and do it fast. Investors will be looking for the company to acquire companies or brands with strong growth potential. Odds are such deals will happen soon.