> Mead Johnson’s Outlook: Great in China and Latin America, Dim in the US>> >> Mead Johnson is reporting first quarter earnings pre-market on 4/26 and analysts are looking at 78c and $978M. They are positive on the growth in Asia and Latin America and believe these international growth will be able to offset the market share losses in America as well as the margin squeeze.>>> Mead Johnson shows continued strength in China, which is the company’s top market and accounted for 29% of the company’s 2011 revenue. Analysts believe 15% market growth this year is realistic, partly helped by the dragon year effect. However, the China market competition will intensify going forward as the key players strengthen focus and refine strategies. Though competition should be largely benign, the market shares of the top 6 players will likely to converge. Currently, the top 6 players are, assuming the Pfizer deal goes through, Mead Johnson (12% market share), Danone (9.8% market share), Nestle (9.6% market share after combined with Pfizer), Abbott (5% market share), Beingmate (9% market share) and Yili (8% market share).>>> Latin America is expected to be the next key driver. Now a $2.2bn market, Latin America’s infant formula is expected to grow by 20% into the year 2016, representing 12% of the global market. The growth is driven by favorable demographics. The birth rate and women workforce are increasing, and full cream milk powder substitution are facing higher demand. Mead Johnson is well positioned in key countries, such as Mexico, Brazil and Argentina. It targets to record $1B sales from the Latin America market by the year 2016.>>> On the contrary, the company is at the risk of losing market share in the US. The Abbott product recall, the ripple effects from negative exposure on cronobacter and the general market decline will likely to put the company on defense. AC Nielsen tracking data shows that over the 12 weeks ending March 17, Mead Johnson sales value declined by 6.8% and volume declined by 12.2%, compared to industry sales decline of 0.9% and volume decline of 10.5%. The management guides the whole year US and EU portion to decline by mid-single digit.>>> For more news and updates, keep it right here at the Financial News Network. I’m Geoff Parrish.
