•  Mead Johnson FY profit up 19%
  •  Margins down, sales up
  •  Shares jump 11.5%
Mead Johnson shares jump on FY gains

Mead Johnson shares jump on FY gains

Mead Johnson has booked an increase in full-year earnings, as sales from Asia and Latin America offset declines in Europe and North America.

The company said yesterday (1 February) its 2012 net earnings totalled US$604.5m, or $2.95 per share, up 19% from $508.5m, or $2.47 per share, for the previous year. EBIT for 2012 totalled $870m, up from $774.1m a year earlier.

The baby formula maker was able to book a strong increase in profits despite rising input costs, which put pressure on margins. Mead Johnson said higher dairy and other commodity costs drove full-year gross margins down 110 basis points.

Mead Johnson said full-year sales rose to $3.9bn, up 7% from 2011. Excluding currency exchange, sales in Latin America and Asia rose 12%, offsetting a 3% decline in North America and Europe.

Looking to 2013, Mead Johnson said it anticipates EPS of $3.20 to $3.28.

Shares in the US baby food maker jumped on the news, climbing 11.52% during the day to close at $76.

Click here for coverage of Mead Johnson's conference call on the results.

Show the press release

Mead Johnson Reports Strong Fourth Quarter and Full Year Constant Dollar Sales Growth of 7 Percent; Delivers Non-GAAP EPS Growth of 10 Percent; Provides 2013 Guidance

http://www.meadjohnson.com/News/Pages/Release-1779870.aspx
GLENVIEW, Ill.--(BUSINESS WIRE)--Jan. 31, 2013-- Mead Johnson Nutrition Company (NYSE: MJN) announced today its financial results for the fourth quarter and year ended December 31, 2012.

Net sales of $3,901.3 million for the full year 2012 were up six percent from $3,677.0 million in the prior year. Excluding an unfavorable foreign exchange impact, sales increased seven percent. Constant dollar sales for the Asia/Latin America segment grew 12 percent, partially offset by a three percent decline in the North America/Europe segment. GAAP net earnings were $2.95 per diluted share for 2012, an increase of 19 percent compared to $2.47 per diluted share in the prior year. Non-GAAP (1) net earnings of $3.08 per diluted share for 2012 were up 10 percent from $2.79 per diluted share in 2011. Fourth quarter 2012 sales of $981.1 million were up eight percent from $911.3 million in 2011, with constant dollar sales up seven percent. Sales for the Asia/Latin America segment grew nine percent excluding a favorable foreign exchange impact, while the North America/Europe segment grew four percent. GAAP net earnings in the fourth quarter were $0.66 per diluted share, compared to $0.42 per diluted share in the prior year, benefiting from higher sales, the timing of pension settlement expense and a lower effective tax rate, partially offset by higher demand-generation investments. Non-GAAP net earnings totaled $0.72 per diluted share for the fourth quarter of 2012, compared to $0.52 per diluted share in 2011. The company provided full-year 2013 GAAP EPS guidance of $3.20 to $3.28. Excluding specified items, estimated at $0.02 per diluted share, the full-year 2013 non-GAAP EPS is expected to be in the range of $3.22 to $3.30. (1) See "Non-GAAP Financial Measures" and the reconciliation of GAAP and non-GAAP results included in this release.

"We are pleased with our strong sales and earnings performance in the fourth quarter and the overall performance of the business in 2012," said Chief Executive Officer Stephen W. Golsby. "The Asia/Latin America segment delivered strong growth, while notably in China, we recovered additional market share in the fourth quarter, with distributors' inventory restored to normal levels by the end of the year. The North America/Europe segment contributed four percent sales growth in the fourth quarter as we made excellent progress building non-WIC* market share in the United States. For the company, full-year constant dollar sales grew at seven percent with non-GAAP earnings per share increasing 10 percent. Tight management of general and administrative spending, coupled with further reductions in our effective tax rate, more than offset the impact of higher commodity costs and helped to fund continued increases in demand-generation investments to drive longer-term growth. Notably, the global Enfa brand reached a major milestone in 2012, exceeding $3 billion in sales."
*WIC = United States Department of Agriculture Special Supplemental Nutrition Program for Women, Infants, and Children

Fourth Quarter Results
Sales for the fourth quarter of 2012 totaled $981.1 million, up eight percent from $911.3 million a year ago. Sales benefited five percent from price, two percent from volume, and one percent from foreign exchange. Earnings before interest and income taxes (EBIT) for the fourth quarter totaled $189.7 million, up 30 percent from $146.1 million in the prior-year period. This was primarily driven by higher sales, the earlier recognition of pension settlement expense in 2012, and lower IT and other IPO-related separation expenses. These benefits were partially offset by higher demand-generation investments.

Net earnings attributable to shareholders totaled $134.2 million, or $0.66 per diluted share, compared to $85.6 million, or $0.42 per diluted share in the prior-year quarter. In addition to the increase in EBIT, the effective tax rate (ETR) decreased for the fourth quarter to 23.8 percent, compared to 32.5 percent a year ago, primarily due to favorable adjustments associated with prior years' tax filings and lower required tax accruals. Net earnings in the fourth quarter of 2012 also benefited by $0.01 per diluted share from favorable prior years' tax items.
On a non-GAAP basis, which excludes specified items, net earnings attributable to shareholders totaled $146.7 million, or $0.72 per diluted share, for the fourth quarter of 2012, compared to $106.5 million, or $0.52 per diluted share, for the same quarter a year ago.

 

Original source: Mead Johnson