Mead Johnson warns on emerging markets: China sales struggle, pricing pressure elsewhere

Mead Johnson warns on emerging markets: China sales struggle, pricing pressure elsewhere

Mead Johnson lowered its full-year sales and earnings outlook yesterday (14 July) after issues in China and other emerging markets hit the group in the second quarter.

Annual sales growth is expected to be in the range of 0-2% on a constant-currency basis, compared to previous estimates of 7%. Including foreign exchange, reported sales are expected to be 2%-4% below the prior year, versus previously forecast growth of 2%.

Full-year EPS guidance, including one-off items, is expected to be in the range of $3.56 to $3.71, versus prior guidance of $3.79 to $3.89.

Mead Johnson said preliminary second quarter sales were 3% below last year, or 7% lower when including currency exchange. Year-to-date sales were flat on a constant currency basis and down 4% on a reported basis.

The company pin-pointed issues in China, where "strong sales" of recently launched imported products failed to offset declines in products manufactured by Mead in the country. Hong Kong cross-border sales "stabilised" but remained below last year's levels.

The company added that competitive pricing activity increased across emerging markets in Latin America and Asia due to slowing emerging market growth and dairy costs "approaching five-year lows".

The group will announce its finalised second quarter results on 23 July.