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Mead Johnson Co. Q1 Earnings

Katie Peralta/Medill

Mead Johnson Co. reported first quarter 2013 earnings of $172.5 million, a 5.1 percent jump from $164.2 million a year ago.  The company's earnings have fluctuated in recent quarters.

Enfamil maker’s Q1 earnings surge

by Katie Peralta
Apr 25, 2013

Mead Johnson Nutrition Co., citing continued solid sales growth in South Asian and Latin American markets, said first-quarter earnings climbed 5.1 percent despite sluggish domestic growth.

The Glenview, Ill.-based infant formula manufacturer said net earnings rose to of $172.5 million, or 85 cents per diluted share, from last year’s $164.2 million, or 80 cents per share.  The latest quarter’s earnings were in line with the expectations of analysts surveyed by Yahoo Inc.

The Enfamil maker’s sales rose 5.2 percent to $1.04 billion from $986.6 million in the year-ago period, despite softened sales in the important China market.

“We are very pleased with these results, as we had expected a lower rate of sales growth due to tough comparison to China’s record results in first quarter last year,” CEO Stephen Golsby said in a conference call Thursday.

Mead Johnson officials have noted the company is working to regain market share it lost in China in mid-2012 after the company raised prices in what a top executive last month told analysts was a “pricing mistake.”

Sales in the company’s Asian and Latin American markets jumped 7 percent $755.3 million.

Morningstar analyst Ken Perkins noted that consumers in Hong Kong bought Mead Johnson products at an unusually strong rate during the quarter, in anticipation of restrictions that were imposed in March on how much formula can be carried into mainland China from Hong Kong. That upswing may have helped to partially offset China’s overall sales slump, the analyst said in an interview.

The 1 percent sales increase in European and North American markets was unexpected, Morningstar’s Perkins said, as management had anticipated sales to be flat.  A declining U.S. birth rate is putting pressure on Mead Johnson’s domestic growth.

Despite slower sales to the federal government’s “Special Supplemental Nutrition Program for Women, Infants and Children,” Perkins noted, “Improvement in the United States was better than expected.”

Golsby, who is slated to retire next week, reaffirmed the company’s earlier  full-year guidance of earnings per share between $3.20 and $3.28.

Perkins said two major factors could affect full-year earnings.

“Near-term, the biggest concern is the Hong Kong restriction” Perkins said. “Long-term, the concern is higher dairy costs.”

In New York Stock Exchange trading Thursday, Mead Johnson shares closed down $1.24, or 1.5 percent, at $79.75.