Mead Johnson full-year sales slip, but China and e-commerce performance 'strong'

By Gary Scattergood contact

- Last updated on GMT

In Asia, Overall, fourth quarter gross sales were $436.9m, 7% down on a reported basis, 4% on a constant dollar basis.
In Asia, Overall, fourth quarter gross sales were $436.9m, 7% down on a reported basis, 4% on a constant dollar basis.
Infant nutrition company Mead Johnson saw sales in Asia – its largest region – slip 9% year-on-year, 5% on a constant dollar basis, to $1.856bn – although the company recorded ‘strong sales growth’ in its key China market.

The company’s full-year and fourth quarter figures were eagerly anticipated amid rumours Nestle is mulling a takeover bid.

Earlier this month we reported how the firm’s strong Asia base,​ which accounts for 48% of sales, was likely to be a motivating factor behind Nestle’s interest.

And while the overall yearly sales slip in the region was far from welcome, Mead Johnson’s China strategy appears to be reaping rewards.

“We continued to experience strong sales growth from our new product offerings in China, which was more than offset by reduced visitor numbers and channel transformation towards an e-commerce model in Hong Kong, and reduced demand for locally manufactured products,” ​the company said in a statement to investors.

CEO Kasper Jakobsen added: "In the fourth quarter we continued to make progress with a series of important strategic transitions in key markets. Our imported products again grew strongly in China - and we doubled our sales volume via e-commerce out of Hong Kong over the prior quarter.

“Though it will take some time for us to complete the transition phase we are currently in, we are encouraged by early signs our plans are working,"

In Asia, Overall, fourth quarter gross sales were $436.9m, 7% down on a reported basis, 4% on a constant dollar basis.

Fourth quarter Asia EBIT decreased 15% on a reported basis and 7% on a constant dollar basis when compared to the prior year quarter.

“The decrease in EBIT was primarily due to the company's strategic investments in the reshaping of our product portfolio and channel mix in China and Hong Kong, and the adverse market dynamics in the Philippines,”​ said the company.

Overall, fourth quarter global net sales came in at $901.6m, 7% down on a reported basis, 4% with a constant dollar.  

Full year 2016 net sales were 8% below the prior year on a reported basis and 3% below the prior year on a constant dollar basis at $3.742bn.

Looking ahead, Jakobsen said 2017 would see the company complete its strategic transition programme, but dampened growth expectations.

“We expect some pressure on both topline and costs in the beginning of the year, and the impact of currency and rising dairy costs will likely weigh on results,”​ he said.

“The impact will be partially offset by momentum behind productivity initiatives in both cost of goods and operating expenses. As previously stated, we expect only very modest growth in both Sales and EPS on a constant dollar basis - with per

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