Mead Johnson Profit Rises Despite Dollar Headwinds

By Lisa Beilfuss 

Mead Johnson Nutrition Co. said first-quarter profit rose 2.5%, though revenue slipped and the company trimmed its sales growth expectation for the year amid unfavorable currency rates.

Illinois-based Mead Johnson, which sells baby formula and children's nutritional products, warned earlier this year it faced significant headwinds from the strengthening dollar.

"With over 70% of our business outside the United States, foreign currency translation negatively impacted our topline," Chief Executive Kasper Jakobsen said Thursday. While most of Mead Johnson's revenue is denominated in foreign currencies, much of its costs are in U.S. dollars.

In all, Mead Johnson reported a profit of $207.4 million, or $1.02 a share, up from $202.4 million, or $1 per share, a year earlier. Excluding items, including currency fluctuations, per-share profit rose to $1.09 a share from $1.02.

Higher gross margins, lower operating expenses and a lower tax rate were the main drivers of earnings growth, the company said.

Revenue declined 1.7% to $1.09 billion.

Analysts were looking for $1.05 in profit per share on $1.113 billion in revenue

For the full year, the company continues to project $3.90 to $4 in adjusted per-share profit, but it trimmed its sales growth estimate to 2% from 3% because of foreign-exchange impact.

Analysts are looking for a full-year profit of $4 a share on $4.55 billion in revenue.

Gross margin improved to 64% from 63.6% in the first quarter, as the company benefited from price increases and lower dairy costs.

On a currency adjusted basis, sales in the company's North America and Europe segment rose 3%, Latin America sales jumped 13% and Asia sales were flat from a year earlier.

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