Reckitt Benckiser Takes GBP5 Billion Hit on Mead Johnson Acquisition -- Update

--Reckitt Benckiser has booked a GBP5 billion write-down on its acquisition of Mead Johnson

--The company swung to a net loss for 2019 on the back of the Mead Johnson charge and a settlement on U.S. opioid-addiction drug probes

--The company warned that its outlook for 2020 is uncertain due to the coronavirus epidemic

By Matteo Castia

Reckitt Benckiser Group PLC said Thursday that it has taken a 5.04-billion-pound ($6.53 billion) hit from its 2017 acquisition of baby-formula producer Mead Johnson & Company LLC, due to weaker-than-expected sales growth in China.

The U.K. consumer-goods company said sales growth at Mead Johnson has been weaker than hoped at the time of the acquisition, particularly due to challenges in China, and that the integration of the business within its health operations has progressed more slowly than anticipated.

Reckitt--which houses Dettol, Harpic and Durex among its brands--said that the charge, together with a $1.40 billion settlement with the U.S. Department of Justice related to its former pharmaceuticals unit Indivior PLC and a GBP898 million expense coming from discontinuing operations, paved the way for a swing to net loss in 2019.

The group posted a net loss of GBP3.68 billion for the year ended Dec. 31, 2019, contrasting a profit of GBP2.16 billion a year earlier. Reckitt booked a pretax loss of GBP2.11 billion, compared with a GBP2.72 billion profit in 2018.

Revenue for the year rose 2% year-on-year to GBP12.85 billion, while on a like-for-like basis sales were up 0.8%. This compares with a guidance of 0%-2% growth given last October.

"We ended 2019 broadly in line with our expectations for net revenue growth and adjusted operating profit from October," Chief Executive Laxman Narasimhan said.

The company said it expects like-for-like revenue growth to be higher in 2020 than last year, but warned that there is uncertainty due to the coronavirus epidemic.

Write to Matteo Castia at [e-mail]

(END) Dow Jones Newswires

February 27, 2020 06:06 ET (11:06 GMT)

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