Mead Johnson sees China infant nutrition rebound
Infant nutrition company Mead Johnson has announced its financial results for the quarter ended June…Infant n
utrition company Mead Johnson has announced its financial results for the quarter ended June 30, 2013. Sales increased 4% to $1,055 million. Sales growth was 8% in the Asia/Latin America segment, partially offset by a 4% decline in the North America/Europe segment due to the impact of businesses exited in late 2012.Net earnings were broadly flat.
“We are encouraged by our revenue growth in the quarter,” said CEO Peter Kasper Jakobsen. “It allowed us to increase demand-generation investments. Our China/Hong Kong business has returned to positive volume growth after three consecutive quarters of decline. We are fully cooperating with the Chinese regulatory authorities in the ongoing probe. We expect to meet with them again in the near future with the objective of reaching a final resolution. We remain confident in our long-term prospects in this important market. Sales growth was strong across South Asia and Latin America, with a majority of markets showing increases in market share. In the North America/Europe segment, we saw higher non-WIC market share in the U.S. offsetting lower category consumption. Importantly, we made significantly higher investments in demand generation throughout our global operations in order to drive future growth.”
Sales for the six months ended June 30, 2013 totalled $2,093.2 million, up 5% from $1,998.9 million a year ago. Sales increased 4% from price and 1% from volume.
EBIT for the first six months of 2013 totalled $480.7 million, down from $497.1 million in the same period of the prior year. In the first half of 2013, as compared to the prior-year period, higher sales and improved gross margins were offset by higher demand-generation investments, transaction gains related to foreign exchange seen in the prior year, and higher pension settlement expense.
“We expect to deliver constant-dollar sales growth of about eight percent from core operations,” Jakobsen said. “We anticipate growth across our global portfolio will offset any sales impact from recent price decreases in China. We will continue to invest in demand generation where we see opportunities to accelerate growth.”
Mead Johnson expects reported sales growth of 6%. This reflects a 2% impact from discontinued non-core businesses and a strengthening U.S. dollar.
