(Yicai Global) Feb. 27 -- Danone predicts that the novel coronavirus outbreak in China, the French good giant's second-largest market, will trim EUR100 million (USD109 million) from its first-quarter sales.

The epidemic will mostly harm the Paris-based firm's drinks business, it said in an earnings report published yesterday.

Danone's operating profit jumped 7.4 percent to EUR3.8 billion (USD4.1 billion) last year as revenue climbed 2.6 percent to EUR25.3 billion. Sales in China tallied CNY19.3 billion (USD2.8 billion), close to 10 percent of its global total.

The firm has also adjusted its performance targets for 2020, revising its sales growth to between 2 percent and 4 percent, rather than between 4 percent and 5 percent due to a series of uncertainties in the macro environment and the unpredictable eventual impact of Covid-19.

Danone has resumed production at its Chinese factories outside of Wuhan, the epicenter of the virus, but the continued closure of its Wuhan plants will harm the supply chain for its Mizone energy drink brand, according to the company. This has put back plans to upgrade the brand in March.

China's beverage market was already growing slower last year and the epidemic has exacerbated this, Zhu Danpeng, a researcher at China Brand Institute, told Yicai Global. The energy drinks market in China rebounded in 2003 after the outbreak of Severe Acute Respiratory Syndrome, but how well Danone bounces back from Covid-19 will depend on its investment and strategy, he added.

The epidemic has had little impact on Danone's milk powder business, a key sector for the since 2018 when the firm began focusing on formula sales in China. Its sales of milk powder surged 20 percent in the fourth quarter of last year.

Editors: Dou Shicong, James Boynton