Shares of French food group Danone fall after it closes Ukraine plant, suspends Russia investments

By Dominique Vidalon

PARIS (Reuters) – Shares in Danone fell 3% on Monday after the French food group said it was suspending investments in Russia and had closed one of its two factories in Ukraine, following Russia’s invasion of the country.

However, the world’s largest yoghurt maker, which announced the measures on Sunday, said it would continue to sell dairy and baby food in Russia, its third largest market after France and Spain.

Danone’s new CEO Antoine de Saint-Affrique was among French bosses who met with President Emmanuel Macron on Friday to discuss the situation in Ukraine, a company spokesman said on Monday, adding it was too early to assess the financial impact of the decisions announced on Sunday.

Danone, which generates around 6% of its sales in Russia and Ukraine combined, controls Russian dairy brand Prostokvashino.

It employs 1,000 people in Ukraine and 8,000 in Russia.

Danone shares had already fallen 9.9% since the start of this year before Monday’s decline.

Danone General Secretary Laurent Sacchi said in a statement on the company’s website on Sunday that the company will continue to monitor the situation in Ukraine, and would apply any decisions made by the French authorities.

“We have decided to suspend all investment projects in Russia but currently maintain our production and distribution of fresh dairy products and infant nutrition to still meet the essential food needs of the local population,” he said.

Danone is due to hold a Capital Market Day on Tuesday when Saint-Affrique will give details of his turnaround strategy for the group.

He replaced Emmanuel Faber who was abruptly ousted as chairman and CEO last year following clashes with some board members over strategy and calls from activist funds for him to resign over the group’s lacklustre returns compared with some rivals.

(Reporting by Dominique Vidalon; Editing by Susan Fenton)