(Jan 26): Danone SA shares fell after the French food company expanded an infant formula recall amid a toxin crisis that’s engulfed Nestlé SA and Groupe Lactalis.
The stock dropped as much as 3% in early Paris trading on Monday. Nestlé declined less than 1%.
Danone late last Friday expanded the number of infant formula recalls to more European markets due to changing standards from regulators. Nestlé has been most affected by the crisis so far, with products pulled from shelves in more than 60 countries.
“We see a big difference between Danone’s situation and Nestlé’s,” Barclays analysts including Warren Ackerman wrote, estimating the financial damage for Nestlé will be 10 times higher than for the French yogurt company. The highest cost to Danone will likely be up to EUR100 million (US$118 million or $150.5 million), he said.
Danone said last Friday it was pulling a “very limited number of specific batches” of formula in targeted markets concentrated in Europe. The French company reiterated its products are safe and the recall was a precautionary measure.
Danone has multiple suppliers and thus is unlikely to be out of stock like products from Nestlé, according to the Barclays analysts. With Nestlé and Danone often the largest two players in many markets, Danone may actually pick up market share alongside smaller players, they said.
See also: LVMH's sluggish sales, downbeat outlook pull down luxury shares
The French company last week removed one of its Dumex Dulac formula products from shelves in Singapore, sending Danone’s stock to its biggest one-day decline in more than three decades last Wednesday.
Uploaded by Tham Yek Lee
