Danone Closes Three Dairy Plants in Europe on Demand Drop

Danone said it plans to shutter plants in Italy, Germany and Hungary, eliminating 325 jobs because of a drop in fresh dairy sales in Europe.

The planned closures at Casale Cremasco, Italy, Hagenow, Germany and Budapest, along with a gradual shift in production volumes to Belgium, Poland, Germany and France, should allow the fresh dairy products division to be more competitive in Europe, Paris-based Danone said today in a statement. The project will be fully implemented by mid-2015.

“Since 2010, a lasting downturn in the European economy and consumer spending has led to a significant decline in sales in this region,” Danone said. “While European sales volumes now show signs of gradual improvement, the group’s fresh dairy products division in Europe has seen overall business fall back, with local cases of surplus capacity.”

Danone shares fell 0.1 percent to 54.88 euros at 9:36 a.m. in Paris, giving the maker of Activia yogurt a market value of 35.3 billion euros ($48 billion).

Fresh dairy volume fell in the first quarter to the lowest level in more than a decade as Danone raised prices and introduced more expensive products. Dairy volume will worsen in the second quarter before starting to improve in the third, the company said in April.

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