Zurich — Danone shares fell after the world’s largest yogurt-maker reported the third consecutive quarterly drop in volume and irked analysts by saying it will include this month’s $10bn takeover of WhiteWave Foods in its like-for-like sales figures for 2017.

The stock declined as much as 2.8% to €61.91 in Paris, even after the maker of Activia yogurt raised its forecast for profit growth this year.

By immediately incorporating WhiteWave into its like-for-like sales reporting, Danone is deviating from standard practice of doing so after the first 12 months of a takeover. Some analysts said the decision obscures the performance of Danone’s dairy business and shows the company isn’t confident in the sales outlook.

"Amalgamating reporting of the two from day one in organic growth does Danone no favours," Gerry Gallagher, an analyst at Deutsche Bank, wrote in a note. "We believe it will only make the market question why it should own the stock."

In addition to including WhiteWave in like-for-like sales straight away, Danone will use a new divisional and regional breakdown starting in the second quarter. It’s combining its existing fresh-dairy operations in North America with WhiteWave’s businesses there, in a unit called DanoneWave. The companies will fold the rest of their dairy businesses into one unit called Fresh Dairy Products. Europe and North America will report as a single region.

‘No visibility’

"Including WhiteWave in organic sales will not make the group look massively better, but it will make fresh dairy look better and mask some of the issues," said Robert Waldschmidt, an analyst at Liberum.

Danone said late on Thursday that worsening volume in its fresh-dairy unit led the weakest first-quarter sales growth in at least a decade.

"There’s no visibility on Danone’s dairy business, and people won’t like that," Waldschmidt said. "The stock is down purely due to the displeasure of how they’re dealing with accounting and, of course, that dairy is seeing no light at the end of the tunnel."

Also on Thursday, Danone said that recurring earnings per share will rise at a double-digit pace at constant exchange rates this year, after increasing its outlook for synergies from the WhiteWave purchase. In February, it predicted growth of more than 5%.


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