US infant formula market Mead Johnson has reported a dip in first-half operating profit, as higher investment levels offset improved sales and gross margins.
The company said EBIT in the six months to the end of June fell to US$480.7m, down from $497.1m in the comparable period of 2012. Lower earnings were the consequence of higher “demand-generation investments”, the company said. Foreign exchange and pension expenses also hit operating profit.
However, a lower tax rate boosted the bottom line and net profit totalled $334.7m, compared to $330m last year.
During the period, the group saw a 5% increase in sales, which rose to $2.09bn. Price contributed 4% to the increase and volume added 1% to the mix.
Mead Johnson is among the companies under investigation in China for allegedly violating anti-trust rules in the country. The US group has, like others subject to the investigation including Nestle and Danone, pledged to lower the price of some formula products on sale there.
In a statement alongside the results, CEO Peter Kasper Jakobsen said: “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.”
Check back for a detailed analysis of the China infant formula market and the impact that the competition probe is expected to have on multinational companies, including Mead Johnson and Nestle, as well as local players.
