Infant formula maker Mead Johnson Nutrition Co. said Thursday its net income slid 10 percent in the second quarter because rising manufacturing, hiring and advertising costs outpaced canceled out an increase in sales.
Mead Johnson said selling, general and administrative spending grew 18 percent and advertising and promotion spending increased 14 percent. It added that costs to separate from the information technology system of its former parent, Bristol-Myers Squibb Co., also contributed to its spending.
Mead Johnson conducted its initial public offering in February 2009 and Bristol-Myers split off the rest of its stake in Mead Johnson in December.
The company reported a profit of $121.4 million, or 59 cents per share, compared with $134.5 million, or 66 cents per share a year ago. Excluding one-time costs, Mead Johnson said its profit fell to 63 cents per share. Revenue increased 6 percent, to $764.2 million from $719.3 million.
Revenues were still short of most analysts expectations, according to a Thomson Reuters survey.
Company shares slipped 54 cents to $52.45 before the market opened.
Sales in Latin America and Asia rose 19 percent to $471.7 million because of improved results in China, Hong Kong, Malaysia, Mexico, Brazil and Peru. In North America and Europe, revenue fell 9 percent to $292.5 million. Mead Johnson said those sales decreased because a year ago, retailers built up inventories of Enfamil Premium in the U.S. It did not see a similar build up this year.
The company narrowed its profit guidance for the year, saying it now expects to earn $2.35 to $2.40 per share excluding one-time items. Its previous outlook called for net income of $2.33 to $2.40 per share. Analysts expect $2.40 per share on average.