Danone to shed Russian dairy enterprise with 1 billion euro write-off By Reuters

PARIS (Reuters) – French meals firm Danone will shed management of its dairy meals enterprise in Russia, it stated on Friday, including that the deal might result in a write-off of as much as 1 billion euros ($978 million).

Becoming a member of the lengthening checklist of world firms making expensive exits from Russia over the warfare in Ukraine, Danone will probably be offloading a enterprise that represents about 90% of the corporate’s operations in Russia, the place solely its toddler diet unit will probably be retained.

“That is the most suitable choice to make sure long-term native enterprise continuity,” a Danone assertion stated, including that the Russian dairy unit accounted for about 5% of the group’s internet gross sales within the first 9 months of the yr.

Shares in Danone rose greater than 1% in early buying and selling, with analysts welcoming information that the corporate was lowering its presence in Russia, saying this might herald a wider of reshuffle of its operations.

Chief Govt Antoine de Saint-Affrique, who took the helm in September final yr, stated the corporate would half with non-performing companies below a turnaround plan he launched this yr.

“Russia is clearly an asset they needed to exit from,” Pierre Tegner, analyst at dealer Oddo BHF, stated in a observe.

“It’s not solely as a result of Russia is a low-margin enterprise with poor development. It’s primarily as a result of this asset has generated numerous distraction over the past 11 years for prime administration.”

Different areas the place the group might evaluation non-core operations embrace liquid milk and fundamental dairy merchandise in Brazil, Argentina, Mexico and Morocco, Tegner stated, in addition to natural milk in United States, child meals in France and Italy, plus small water operations in Spain and Poland.

The French firm is the world’s largest yoghurt producer and controls Russian dairy model Prostokvashino.

Danone stated in March that it might proceed to provide important dairy and toddler diet merchandise in Russia however had reduce different ties with the nation over its warfare in Ukraine.

The corporate stated on the time that it had ended all investments in Russia and wouldn’t take any money, dividends or income from its enterprise there.

Danone didn’t open up to whom its Important Dairy and Plant-based (EDP) division can be transferred however stated the transaction is topic to regulatory approvals and would end in deconsolidation of the enterprise from its accounts.

($1 = 1.0224 euros)