By Dominique Vidalon

PARIS (Reuters), – French food company Danone has pledged to increase investments in its brands, and to actively rotate its asset portfolio as it seeks revenue growth. This is according to Antoine de Saint-Affrique’s new strategy.

Saint-Affrique was appointed chief executive officer at the largest global yoghurt manufacturer in September. He made the statement before an investor meeting.

Evian, Badoit water, and Activia yoghurt are all owned by the consumer goods company. It expects that its operating margin will drop to 12.7% from 13.7% in 2021. Like-for-like sales growth of 3%-5%, compared to 3.4% in last year.

Danone stated that it set a profitable growth goal of 3% to 5% for the period 2023-2024. It also said it wanted a faster recurring operating income growth than net sales.

Danone’s plan will focus on improving competitiveness across core categories and geographies. It will also seek to expand segments, channels, and geographies in order to be more competitive. The portfolio rotation is expected to reach around 10% of net revenue and the annual capital expenses enveloppe to approximately 4.5%.

Saint-Affrique faces the main problem of increasing sales in all three business units – infant formula, dairy products and plant-based foods.

Danone is also facing rising input costs and further uncertainty due to Russia’s invasion in Ukraine. This has forced Danone not only to stop investing in Russia but also face mounting input cost.

Saint-Affrique replaced Emmanuel Faber who was suddenly ousted from his position as Chairman and CEO. This followed clashes between board members and activist fund representatives for strategy.

Activist investors called for increased investments to support innovation and Danone’s sale of less-profitable brands.

Danone shares lost 12% in the first quarter of this year. This is slightly less than what their European sector has experienced, which was down 13%.