If there's anything you can't leave off the grocery list in tough times, it's baby food. Mead Johnson (MJN) is happy to provide baby formula no matter where in the world you are — and emerging markets are feeding its growth story.
For the first quarter of this year, Mead Johnson's profits rose to $146.1 million, or 71 cents a share, from $125.6 million, or 61 cents a share, a year earlier.
Sales rose 18 percent to $899.8 million, beating an average analyst estimate of $848 million. "We are very pleased with our sales and earnings performance in the quarter," said Chief Executive Officer Stephen W. Golsby in a statement.
"The Asia/Latin America segment reported sales growth of 27 percent and now accounts for over 64 percent of global sales."
China and Hong Kong fueled growth in the Far East, while increased demand in the United States served as the driving force behind the 5 percent sales growth in the North America/Europe segment.
"Globally, our growth was heavily weighted towards volume, and we grew market share from product innovations, increased demand-generation investments and high standards of marketplace execution," Golsby said.
Higher commodity and input costs and increased spending will pose a challenge for the company in the second quarter, he added. Plus the second quarter of 2010 was a strong one, so beating it will be tough to do.
Rising sales outlook
But the company is optimistic. Golsby sees sales growing by 10 percent, despite rising input costs in the second half. "Given our expectations of higher sales, we are raising our full year non-GAAP earnings estimate to $2.62 to $2.70 per share," he said.
Analysts are not so optimistic, although they are not too negative either. Goldman Sachs downgraded the company two notches to neutral from conviction buy. Like much of the market, the stock is trading close to the top of its 52-week trading range.
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