PREVIEW-Danone seen posting higher H1 EBIT, sales

* H1 EBIT seen at 1.265 bln euros, vs 1.206 bln a year ago

* H1 sales seen at 8.261 bln euros, vs 7.520 bln a year ago

* Analysts looking for H2 outlook, costs, consumer demand

* Results due at 0530 GMT on July 27

By Dominique Vidalon

PARIS, July 23 (BestGrowthStock) – French food group Danone
(DANO.PA: ) was expected to post higher first-half operating
profit and sales next week, driven by volume growth across its
four divisions, as the global economy slowly recovers.

Earnings before interest and tax (EBIT) are seen rising 5
percent to 1.265 billion euros ($1.6 billion), according to the
average in Thomson Reuters StarMine SmartEstimates, which
predict future earnings by putting more weight on recent
forecasts of top-rated analysts.

Sales are seen rising 9.8 percent to 8.261 billion euros
from 7.520 billion euros.

Operating margin as a percentage of sales is expected to
narrow to 15.3 percent from 16.0 percent, due mainly to price
cuts under Danone’s Reset initiative started in 2009 to pass on
lower milk prices to its customers.

Danone, the owner of Evian and Badoit bottled water and
Bledina baby food, kicks off the earnings season for Europe’s
food giants with rival Unilever (ULVR.PA: ) reporting on Aug. 5
and Nestle (NESN.VX: ), the world’s top food group, on Aug. 11.

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For a comparison graphic with global peers see
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Analysts will look for comments from the world’s largest
maker of yoghurts on the price of commodities such as milk and
on consumer spending trends amid consumption worries about the
impact of European austerity plans and high unemployment.

In April, Danone said it expected to continue facing a
challenging financial, economic and social environment in 2010,
due to difficult consumption trends in western economies and
inflation of raw materials.

Analysts expect Danone to reiterate its 2010 targets for a
stable operating margin and like-for-like sales growth of at
least 5 percent.

Danone shares have gained 7 percent so far this year,
lagging a 12.6 percent rise in the European Food and Beverage
index (.SX3P: ). But they have returned to a premium rating
against Nestle and Unilever, trading at 16.2 times 12-month
forward earnings against 15.5 times for Nestle and 14 for
Unilever.

This reflects “a belief in the market that the recently
announced Unimilk deal has removed near-term acquisition risks
and increasing confidence that the group is back on a growth
track,” RBS said in a recent note.

In June, Danone drove deeper into the fast-growing Russian
dairy market announcing a planned merger with Unimilk
(KUNMI.RTS: ). It said at the time it would rethink its options
for its 18 percent stake in Russian juice and dairy maker
Wimm-Bill-Dann (WBD.N: ). Wimm-Bill-Dann said separately it was
ready to buy the stake.

Investment Basics

(Reporting by Dominique Vidalon; Editing by Sharon Lindores)
($1 = 0.7766 euro)

PREVIEW-Danone seen posting higher H1 EBIT, sales