Danone (DANOY)  shares fell to a one-month low Friday as disappointing sales in its yogurt division weighed on first quarter performance and offset a boost in the company's full-year earnings forecast linked to the recent takeover of WhiteWave.

Danone, the world's biggest yogurt maker, reported like-for-like sales growth of 0.7% in the first quarter across the group to €5.5 billion, in its earnings release after the markets closed on Thursday. There was a 2.6% decline in volume across the group. Danone said it's now targeting double-digit recurring EPS growth at constant exchange rates, instead of a rise of "at least 5%" it had targeted in February before WhiteWave was included.

Investors, however, were not impressed by Danone's increase to its guidance for recurring earnings-per-share growth for 2017, on the back of it completion of WhiteWave and priced the stock 2.1% lower by 11:30 CET in Paris at €62.36, the weakest level since March 17. The decline outpaced the jittery CAC 40 benchmark, which was down 0.9% following Thursday night attack on a police officer on the Champs-Elysees and ahead of the first round of the presidential election on Sunday.

Jefferies analysts Martin Deboo said the inclusion of WhiteWave in like-for-like sales figures for this year was a "a signal of a lack of confidence in the core top line."

The French 'national champion' was also particularly hard hit in its Fresh Diary division, where like-for-like sales decreased by 2.3% and volumes fell by 5.3%.

Sales were hit by the performance of its well-known yogurt brand Activia. A relaunch of the brand has not gone to plan and "Danone is implementing all necessary initiative to reverse this trend," it said Thursday. It is reworking the packaging, communication and campaigns, which will be rolled country by country over the course of the second quarter.

In Europe, sales were down due to a "difficult market environment" and worsening consumption trends in Brazil.

Making matters worse for the company, milk prices are expected to rise steeply throughout the year. It expects a year-on-year mid-single digit rise in the cost of strategic raw materials.

Danone however did see a rise of 1.7% in like-for-like sales in its waters division where it has a leading position. It Early Life Nutrition and Medical Nutrition also saw good growth, reporting a 4.1% and 8.8% increase in like-for-like sales respectively.

Danone completed its $12.5 billion acquisition of WhiteWave, the maker of Alpro and Silk non-dairy milks, earlier in April after its agreed to divest organic yogurt brand Stonyfield Farms.

Danone Thursday said that the new division would incorporate North American dairy operations with WhiteWave in a new strategic business unit known as DanoneWave.

Danone expects a $300 million run-rate synergies of recurring operating income by 2020 and an improvement of full-year like-for-like sales growth of 0.5% to 1%.

The company also announced other changes include the reporting of Europe and North America as a single region and the combination of Early Life Nutrition and Advances Medical Nutrition as a single category to foster synergies.

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