June 12, 2014          
 

Danone to close three European dairy plants by mid-2015

French food company Danone said it planned to shut three plants in Italy, Germany and Hungary and cut 325 jobs to cope with falling demand for fresh dairy products, Reuters reports.

The world's largest yoghurt maker, with brands such as Activia and Actimel, makes 60% of its revenue in dairy, a sector hit by a spike in milk prices and weak consumer spending in austerity-hit Europe.

Danone said it would close its sites at Casale Cremasco in Italy, Hagenow in Germany and Budapest in Hungary and gradually shift production to Belgium, Poland, Germany and France to make its European dairy business more competitive.

Danone's European fresh dairy business employs around 9,000 people in 19 factories. While European sales volume showed signs of gradual improvement, business had weakened in Italy, Germany and Hungary, leading to some surplus capacity, it said.

"The overall situation in Europe is improving but we have to manage local situations," a Danone spokeswoman said, pointing out that fresh dairy sales in Hungary had dropped by 20% between 2011 and 2013.

The group's fresh dairy sales volumes fell 3.7% year-on-year in the first quarter as Danone passed onto customers rising milk prices in some countries such as Russia.

"In view of the situation, notably in Italy and Germany, the closures seemed unavoidable," said Natixis analyst Pierre Tegner.