New Danone CEO sweetens shift to financial metrics

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LONDON (Reuters Breakingviews) - Danone’s next CEO could follow a sharper financial recipe. The French yoghurt maker’s board is meeting on Monday to appoint Antoine de Saint-Affrique, the chief executive of Barry Callebaut, as its new boss, Le Figaro reported. Investors will welcome his track record.

Danone could use a sprinkle of shareholder magic. The 39 billion euro group’s humdrum operating and share price performance played a big role in the ousting of former boss Emmanuel Faber. Barry Callebaut has done much better. In six years at the helm, de Saint-Affrique expanded the regions the 11 billion euro company operates in and transformed it from a commodity seller to a provider of more profitable end ingredients for brands like Magnum and Hershey’s.

Before the pandemic struck, Barry Callebaut’s operating profit margin had risen above 8%, from 6% in 2016. Since de Saint-Affrique took charge in October 2015, the company has returned 105% to shareholders, according to Refinitiv, compared with 40% at premium chocolatier Lindt & Spruengli and just 22% at Danone.

The former reserve naval officer’s experience extends beyond cocoa. He spent 15 years in senior roles at Unilever, rising to become president of the Anglo-Dutch group’s foods division. That’s valuable experience for juggling Danone’s dairy and plant-based foods, water and other units.

Like its larger consumer rivals, Danone faces the challenge of managing a smorgasbord of local and international brands. Extracting underperforming product lines without disrupting the marketing of others requires precision. Activist investors have urged the company to ditch less profitable and slower-growing brands.

Fans of Danone’s leadership on sustainability and ethical issues may be less enthused, however. Back in 2016 de Saint-Affrique committed Barry Callebaut to eliminating child labour, using totally sustainable ingredients in all its products, being carbon neutral, and lifting 500,000 farmers out of poverty. But the company gave itself a decade to reach these laudable targets. It currently lags Lindt in being able to trace where its cocoa beans come from – a key factor in ensuring sustainable sourcing.

Refinitiv ranks Barry Callebaut at B-plus in environmental, social and governance factors; Danone scores an A-minus. However, the new CEO seems unlikely to dilute the yoghurt group’s values, which it formally enshrined in its corporate status last year. For investors, a sharper focus on financial metrics should be a relief.

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- Danone’s board is due to meet on May 17 to approve Barry Callebaut boss Antoine de Saint-Affrique’s nomination as chief executive, Le Figaro newspaper reported on May 16.

- The 39 billion euro yoghurt maker is looking for a replacement for Emmanuel Faber, who was ousted in March.

- Danone shares were up 1% at 58.10 euros by 0755 GMT on May 17.

- For previous columns by the author, Reuters customers can click on [AFANA/]

(SIGN UP FOR BREAKINGVIEWS EMAIL ALERTS | Editing by Peter Thal Larsen and Oliver Taslic. Graphic by Vincent Flasseur.)

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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