UPDATE 3-Mead Johnson cuts outlook as China challenges remain

Thu Oct 25, 2012 12:10pm EDT

* 3rd-qtr EPS $0.71/shr misses Wall Street view by a penny
    * Sales of $921.3 mln miss estimates of
    * Sees '12 EPS $2.91-$2.96/shr; Prior view was
$2.95-$3.05/shr
    * Shares down 9 pct


    Oct 25 (Reuters) - Mead Johnson Nutrition Co 
reported weaker-than-expected quarterly results and cut its
full-year outlook, hurt by weakness in China, Europe and the
United States, sending its shares down about 9 percent.  
    The maker of Enfamil baby formula said it now expected 2012
earnings of $2.91 to $2.96 per share, down from its prior
forecast of $2.95 to $3.05.
    The company lost market share in China earlier this year
after it raised prices and a competitor offered aggressive
promotions. In the third quarter, sales in the Asia/Latin
America segment rose 1 percent, as price increases were largely
offset by volume declines and the strong U.S. dollar, which
reduces the value of overseas sales. 
    Sales slipped to $921.3 million, missing analysts' average
estimate of $976.9 million, according to Thomson Reuters      
I/B/E/S.
    Sales fell 6 percent in the North America/Europe segment.
The company cited the weak economy in Europe and the impact in
North America of lower births and a lingering impact from a
contamination scare late last year.
    Net income was $140.3 million, or 69 cents per share, down
from  $144.7 million, or 70 cents per share, a year earlier. 
    Excluding items, earnings were 71 cents per share. On that
basis, analysts on average were expecting 72 cents, according to
Thomson Reuters I/B/E/S. 
    RBC Capital Markets analyst Edward Aaron said the overall
results were disappointing, but he noted a few bright spots --
the fact that sales do not seem to be slowing in other emerging
markets, that the China weakness was also related to distributor
inventory reductions, and that marketing spending has not
declined. 
    Shares fell 9 percent to $63.20 on the New York Stock
Exchange.
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