Promising Numico results may woo competitors

By Anita Awbi

- Last updated on GMT

Related tags Baby food Groupe danone

Royal Numico reported an impressive 13.4 per cent growth for the
third quarter, inviting speculation of a possible takeover as rival
companies are attracted to its portfolio of lucrative baby food

The Dutch manufacturing giant, famous for baby food and specialised nutrition products, raised its 2005 sales growth forecast for the second time this year, as strong performance across Eastern Europe, Indonesia, the UK and Ireland saw a 14 per cent growth in its baby food brands.

The firm, which also provides specialised nutrition for AIDS and cancer sufferers, reported earnings of €98 million before interest, tax and amortisation - up from a restated €78m a year ago.

Datamonitor analyst John Band told​: "It's a strong result which is always good for encouraging a buy-out.

"They've got some sturdy brands and the baby food market is showing absolute growth so it's a good area to focus on. Numico's current positioning certainly represents a tempting offer for a leading food company who has a portfolio of baby food products."

Any company producing drinks, personal care or food for young children may look to expand their range to include Numico's popular Milupa and Cow & Gate brands, he suggested.

But French yoghurt and biscuit maker Danone denied rumours that it wants to acquire the Dutch infant nutrition firm, after speculation of a Danone bid pushed up Numico's shares in September.

It was reported that Danone was considering a significant acquisition as a means of protecting its group against takeover attempts.

But Band believes the current manufacturing market may not be favourable for such a merger, as pressure mounts to keep profit margins up in the face of increased fuel and transportation costs.

"Many large companies are playing lean at the moment. It's a possibility that there could be a bid, but it's not immediately clear who it would be in the current climate,"​ he added.

Numico CEO Jan Bennick told Reuters the company is not interested in becoming a takeover target, or entering into a joint venture.

"We are very happy on our own. We have no lack or opportunities for (organic) growth,"​ he said.

Earlier this year the company acquired Mellin, Italy's second largest baby food manufacturer, strengthening its position.

And having sold the unprofitable American GNC nutrition centres in 2003 Numico is placed to continue achieving peak performance levels.

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