By Dominique Vidalon
PARIS (Reuters) - French food group Danone
The world's largest yoghurt maker, whose brands include Actimel and Activia, said action to restore sales in affected Asian markets was generating "very gradual" results and that it did not expect these sales to recover before early 2014.
"We are not yet seeing a recovery in our sales (in the affected markets)," Chief Financial Officer Pierre-Andre Terisse told journalists.
Sales to consumers in these markets last month represented only 40 percent of their pre-crisis level in July, he said.
To counter weakness in Europe, the maker of Bledina baby food and Volvic water has been expanding in fast-growing markets in Asia, notably China, where previous food-safety scares have boosted demand for foreign baby milk formula.
China is an important market for Danone's baby food division, which accounts for 20 percent of group sales, making it the No. 2 contributor after dairy.
But Danone has faced a variety of problems in China this year. In August it had to recall infant formula products in Asia due to an unfounded health scare stemming from New Zealand-based supplier Fonterra
Danone said that as a result of the Fonterra recall its baby food sales fell 8.6 percent in the quarter, reversing a 15.2 percent rise in the first-half. This was much worse than average market expectations of a 3 percent decline.
Danone said the Fonterra recall would cost it 350 million euros (295 million pounds) in lost 2013 sales, 280 million in lost margin and 300 million in lost cash.
Growth improved in the quarter at Danone's core dairy division, however, while its water business benefited from a hot summer in Europe.
Danone said third-quarter group sales rose 4.2 percent like-for-like to 5.259 billion euros, a slowdown from 6.5 percent growth in the second quarter.
This was below the average estimate of 4.8 percent in a Reuters poll of six analysts and in the company-compiled consensus of analysts.
For 2013, Danone said it now expected 2013 like-for-like sales growth of between 4.5 percent and 5 percent.
It also now expects its full-year operating margin to decrease by 80 basis points against a previous forecast of a decline of between 30 and
(Editing by James Regan)