Danone, the owner of Evian bottled- water and Activia yogurt, rose the most in almost three years in Paris trading after fourth-quarter sales beat estimates and the company announced plans to cut 900 jobs in Europe.

The shares gained as much as 5.5 percent to 52.97 euros, the steepest intraday advance since May 2010. Like-for-like sales increased 4.9 percent in the fourth quarter, exceeding analyst estimates of a 3.7 percent gain.

The sales growth helped ease concern over weakening demand for dairy products in southern Europe as consumers shift to cheaper private-label alternatives. Danone, which gets more than half its sales from dairy products, said it will cut about 4 percent of jobs in Europe, or almost 1 percent of its total workforce, as part of a plan announced in December to reduce costs by 200 million euros ($267 million) over two years.

The stronger sales “might indicate that we may be close to a turning point,” Warren Ackerman, an analyst at Societe Generale, said in a note to clients. A 0.4 percent increase in the quantity of dairy products sold was the main reason that revenue beat estimates in the quarter, he said.

Eoin Treacy's view Interest in food companies has increased following last week's bid for Heinz but one of the primary reasons for this is a considerable portion of the processed foods and ingredients sector is booming. Danone's impressive earnings growth has been fuelled not by expansion in its domestic European businesses but by its Rest of the World and Asian categories. These are its fastest growing regions and now represent 40% of revenue.

Following the introduction of the Euro, the majority of Europe's multinationals concentrated on building pan European franchises in order to gain the greatest possible advantage from the single currency. However, in the aftermath of the sovereign debt crisis, those companies that neglected to grow their international businesses have underperformed while more globally oriented companies have outperformed. The food sector is heavily weighted by globally oriented companies with strong franchises and this may have contributed to its relative strength. I thought this may be an opportune time to review the European sector.

Danone (2.61%) has been ranging with an upward bias since 2011 and found support last week in the region of the 200-day MA. A sustained move below €50 would be required to question medium-term scope for continued upside.

Among French mid-caps devoted to the food sector ready meal producer LDC (1.84%) is predominately focused on Europe. The share broke out of a three- year range last month and while somewhat overbought a clear downward dynamic wold be required check momentum beyond a brief pause.

Global revenue growth continues to outstrip that of Europe for cheese producers Bongran (2.4%) and Fromageries Bel (2.64%). Bongran posted a failed downside break in November and has since rallied back to test the €50 area. A sustained move below the 200-day MA, currently near €47, would be required to question medium-term scope for continued higher to lateral ranging. Fromageries Bel SA has been ranging mostly above the 200-day MA since early 2012 and is currently testing the upper boundary. A clear downward dynamic would be required to check current potential for a successful upward break.

In the UK Associated British Foods (1.7%) is an S&P Europe-350 Dividend Aristocrat. Its revenues are split 50/50 between the UK and the rest of the world with clothing retail accounting for approximately a third. The share has performed remarkably well over the last three months but is becoming increasingly overbought and the first clear downward dynamic is likely to signal a peak of medium-term significance.

Elsewhere Tata & Lyle (3.5%) has been consolidating its earlier advance for much of the last two months and a sustained move below 700p would be required to question medium-term upside potential.

Among UK mid-caps in the food sector cattle breeding services company Genus yields 1.13%. The share is globally diversified and has held a progression of higher reaction lows within its yearlong consolidation. It found support this week in the region of 1400p and a sustained move below the 200-day MA would be required to question medium-term upside potential.

In the drinks sector, the Office of Fair Trading's refusal to allow the merger of Britvic (4.85%) and Barr (2.21%) took a toll on both shares. However they have steadied in the region of their respective 200-day MAs and clear moves below their trend means would be required to question medium-term upside potential.

In Switzerland Nestle (3.04%) is globally diversified and an S&P Europe-350 Dividend Aristocrat. The share has been ranging below CHF65 since the beginning of the month and a sustained move below CHF60 would be required to question medium-term upside potential.

Among Swiss chocolate manufacturers Barry Callebaut (1.7%) and Lindt & Spruengli (1.28%) are globally diversified. Barry Callebaut has been ranging with a mild upward bias since early 2012 and a sustained move below the 200-day MA would be required to question medium-term upside potential. Lindt & Spruengli has become somewhat overextended following an impressive advance and is looking susceptible to mean reversion.

Irish and Swiss listed Aryzta (1.14%) broke out of a two-year range in January and a sustained move below CHF48 would be required to question medium-term upside potential.

Ireland's Kerry Group (0.8%) is S&P Europe-350 Dividend Aristocrat and the Americas and Asia Pacific represent its fastest growing regions. The share has been ranging in a gradual mean reversion since hitting a medium-term peak in November and found support in the region of the MA last month. A sustained move below €37 would be required to question medium-term scope for additional upside.

Elsewhere in the Irish food sector Glanbia's (1.03%) largest market is the Americas. The share has paused in the region of €8 over the last two months in a gradual process of mean reversion but a sustained move below the 200-day MA, currently near €7.20, would be required to question medium-term upside potential.

Irish and UK listed Fyffes (3.28%) broke out of a more than three-year range in December. Today's downward dynamic probably capped the short-term advance to signal a process of mean reversion is now underway.

In the Netherlands CSM (4.1%) manufactures bread & pastries. The share broke successfully above €15 in October and continues to post a progression of higher reaction lows. A sustained move below €15 would be required to question medium-term upside potential. Nutreco (2.74%) produces animal and fish feed and is globally diversified. The share broke out of a two-year range in November and a sustained move below €63 would be required to begin to question medium-term upside potential.

Germany's Suedzucker (2.1%) relies of Europe for its revenues. The share remains in a relatively consistent uptrend and while somewhat overbought at present, a sustained move below the 200-day MA, currently near €28.50, would be required to question medium-term upside potential.


Diminished Lives and Futures: A Portrait of America in the Great-Recession Era – Thanks to a subscriber for this interesting survey by Mark Szeltner, Carl Van Horn, Ph.D. and Cliff Zukin, Ph.D. for the John J. Heldrich Center for Workforce Development. It is posted without further comment but here is a section: