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DANONE: current operating margin for the first half penalized by the Covid-19

During its general meeting, Danone provided an update on its operational and financial situation. After China at the beginning of the year, Europe and North America from March, new countries have seen their health and economic situation worsen since April, notably in Latin America, Indonesia and Africa, affected by the closure of local shops and the confinement of consumers, recalls the agrifood group.

In Europe and North America, activity is slowing due to the storage of precautionary purchases observed at the end of the first quarter, particularly in Specialized Nutrition, and the full effect in the second quarter of the closure of out-of-home circuits o sales are down by around -50%, to which the watershed is particularly exposed. Water sales are therefore expected to fall by around -30% overall in the second quarter.

The additional direct costs to maintain business continuity, estimated at around 100 million euros in the first half (health, industrial and logistics costs directly linked to covid-19), will have an impact on the current operating margin in the first half.

Cash conservation actions are continuing and the two bond missions of 800 million euros each carried out in the first half of very good conditions have further strengthened Danone’s balance sheet and liquidity position.

The company will provide more information when its first half results are published on July 30.

Danone’s medium and long-term prospects remain solid, while the health context of the coronavirus pandemic confirms the relevance of its strategic choices around health-oriented categories, local food models, and the promotion of regenerative agricultural practices.

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