Mead Johnson profit up; starts its own price-fix probe

Reuters

By Atossa Araxia Abrahamian and Maria Ajit Thomas

Oct 24 (Reuters) - Mead Johnson Nutrition Co, themaker of Enfamil baby formula, reported a 15 percent increase inquarterly profit on Thursday and raised its full-year earningsforecast, largely due to strong sales in China and Hong Kong.

The company also said it had launched its own investigationinto alleged price-fixing by its Chinese subsidiary. It said itwas complying with requests from the U.S. Securities andExchange Commission for information on the matter.

Last August, China fined six companies, including MeadJohnson, a total of $110 million following an investigation intoprice-fixing and anti-competitive practices by foreign makers ofbaby formula.

Mead Johnson said its third-quarter net income rose to$161.6 million, or 79 cents per share, from $140.3 million, or69 cents per share, a year earlier.

Earnings in the latest quarter were reduced by 11 cents pershare by the fine the company paid in the Chinese probe.

Excluding one-time items, earnings were 91 cents per share,beating analysts' average estimates of 80 cents, according toThomson Reuters I/B/E/S.

Sales rose 14 percent to $1.05 billion. Foreign exchangepushed sales down 2 percent, while higher prices lifted them 4percent, the company said. Analysts were expecting $998.8million.

The company raised its forecast for the rest of the year,saying it now expects earnings of $3.30 to $3.37 per sharebefore one-time items, on sales growth of 9 to 10 percent. Itpreviously forecast $3.22 to $3.30 per share on sales growth ofabout 8 percent.

Mead Johnson said it has hired outside lawyers to conductthe investigation of its Chinese unit. The probe is beingoverseen by members of the company's board of directors.

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