PARIS—Danone, Europe's largest yogurt maker, reported third-quarter revenue that slightly missed analysts' estimates as difficulties in China weighed on sales.

Sales fell 1.8% to €5.54 billion ($6.10 billion) in the three months to Sept. 30, the Paris-based company said Tuesday. Comparable sales, which strip out the effects of fluctuating exchange rates, rose 2.1%, slightly below analysts' expectations of a 2.2% rise.

Danone is adjusting to new Chinese regulations on the sale of infant formula, where the government earlier this year moved to close a tax loophole that had allowed websites operating outside of China to lower prices. Danone also said that an "unfavorable trend" in China had hit sales of its water division.

"We're in an environment that remains volatile with a transition in China that's ongoing," said chief financial officer, Cé cile Cabanis.

"We're not looking for short-term sales growth at any price," she said. "We're looking to strengthen our model and improve our margin before we look to accelerate our growth."

Danone confirmed its full-year financial targets, including comparable sales growth of 3% to 5% and an expansion in its recurring operating margin of 0.5 percentage point to 0.6 percentage point.

The figures come as the company continues to move ahead with its agreed acquisition of U.S. organic-foods producer WhiteWave Foods Co. in a deal that will hand it a slice of the fast-growing market for organic food and double its North American business.

WhiteWave shareholders approved the union on Oct. 4 and the companies expect the deal to close by the end of the year despite lingering concerns among some shareholders and organic dairy producers.

Comparable sales of fresh dairy, the company's largest unit, grew 2.2% in the third quarter to €2.68 billion as the company continues to revamp its most popular brands in Europe, including Actimel and Activia, to boost growth.

Third-quarter sales at Danone's waters division dropped 0.1 % compared with a year earlier. Like-for-like sales at the early-life division, which includes infant formula, rose 1.7% on a comparable basis.

Write to Nick Kostov at Nick.Kostov@wsj.com

(END) Dow Jones Newswires

October 18, 2016 02:45 ET (06:45 GMT)

Copyright (c) 2016 Dow Jones & Company, Inc.
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