Asia sales slide at Mead Johnson but CEO insists China business ‘remains on track’
Globally, net sales in the reported quarter were $883.5m, down 8.2% year-on-year.
But Asia, which accounts for nearly half of total sales, declined 13% to $434.1 million due to volume reductions and adverse foreign exchange fluctuations.
The firm said it was affected by lower cross-border trade, reduced demand for locally manufactured products and extra promotional costs related to Chinese New Year.
“Advertising and Promotion increased 6% in the first quarter compared to the prior year quarter, primarily as a result of investments to support product launches and the channel transition in China,” it told shareholders.
The figures may concern Reckitt Benckiser, which previously said the potential for Asia growth was one of the main factors behind its takeover.
In Latin America sales declined by 3% to $156.2m, while in North America/Europe they dropped by 3% to $293.2m
Meanwhile, the takeover deal, which has already been unanimously approved by Mead Johnson’s board of directors, is expected to close in the third quarter of 2017.
CEO Kasper Jakobsen said: “Our first quarter of the year results were much as expected. 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.”
