Danone yesterday raised its full-year forecasts and said it was expanding the scope for possible acquisitions as it posted record six-month sales growth, with gains of more than 20 per cent in China, Russia and Mexico.
The French food company's better-than-expected sales and upbeat outlook helped lift its shares to all-time record 105.30 euros.
"First-half 2006 performance is the strongest ever in the group's history in terms of like-for-like growth," Danone chairman and chief executive Franck Riboud said in a statement.
Sales rose 12.1 per cent to 7.217 billion euros (£4.93 billion), the French maker of Actimel dairy drink, Evian water and Lu cookies said, beating the average forecast of 7.18 billion euros (£4.91 billion).
On a like-for-like basis, sales were up nine per cent.
Sales volumes rose across all of its businesses, with double-digit growth rates in most markets outside France and the highest growth in some emerging markets.
In its home market, the dairy business recovered, and it boosted its biscuit business through product launches and increased advertising.
Danone expected full-year like-for-like sales growth of seven to eight per cent, instead of five to seven per cent before, and said underlying earnings per share should grow about 15 per cent, compared with earlier guidance of "at least ten per cent".
Underlying earnings per share, grew 25 per cent in the first half to 2.50 euros, implying some slowdown in the second half.
Finance Director Antoine Giscard d'Estaing said the group could be expected to face a higher tax burden in the second half and was anticipating that "the euro will probably be much stronger in the second half" but hinted at an upwards surprise.
"When we give guidance for EPS we are conservative," he told analysts.
Danone left unchanged its forecast for the full-year operating margin to improve by 20 to 40 basis points.
First-half operating profit rose to 972 million euros (£665.7 million), or 13.46 per cent of reported sales, from 857 million (£586.9 million).
Danone said this represented an underlying - stripping out changes in the scope of consolidation and currencies - improvement of 30 basis points. A 71 basis point improvement in operational results more than offset declines of 21 basis points due to expansion in lower-margin emerging markets and 20 basis points from higher commodity prices, it said.
The company said margins of both its dairy and biscuit divisions improved, with only beverages lower mainly due to higher fuel costs and advertising spending in Asia.
Its French water business also was hit by destocking, which caused problems for some retailers when France was gripped by a heatwave in July, d'Estaing said.
First-half net profit rose to 704 million (£482.1 million) from 346 million euros (£236.9 million) a year earlier and beat the forecast of 624 million.
Giscard d'Estaing said the company was looking more actively at acquisitions that could help it "round off" its portfolio of brands, citing the beverages sector.
"The fact we have changed our strategy from pure water to water-related means it makes sense for us to study a certain number of opportunities we did not study before," he said.