US infant formula business Mead Johnson has booked lower first-quarter sales but increased earnings, ahead of the group’s acquisition by UK consumer goods group Reckitt Benckiser.
The Enfamil maker said net sales fell to US$883.5m compared to $962.1m in the year-ago period. Net earnings were $117.6m from $76.7m previously.
Net sales were 8% below the prior year quarter on a reported basis and 5% below the prior year quarter on a constant-dollar basis. EBIT was 3% higher in the first quarter at $155.1m compared to the prior year quarter.
Mead Johnson said “benefits from lower dairy costs and price increases were more than offset by higher costs for new premium products, increased trade investments and adverse foreign exchange”.
“Excluding specified items and the impact of foreign exchange, non-GAAP EBIT was 22% below the prior year quarter due to lower sales and reduced gross margin,” the group said.
CEO Kasper Jakobsen said the results were “much as expected”.
Jaokbsen said: “Comparisons to last year were impacted by one-time events in both the base year period and the current period. While we are addressing challenges across the business, we importantly remain on track in China, where our new products continue to deliver strong growth for us and the channel transition to an online model in Hong Kong continues to accelerate.”
In a separate announcement today, Mead Johnson called a special meeting for 31 May for stockholders to formally approve the $17.9bn takeover by Reckitt Benckiser. Reckitt Benckiser has said previously it expects the acquisition to be finalised by the end of the third quarter of the year.