Reckitt Benckiser Takes GBP5 Billion Hit on Mead Johnson Acquisition -- Update
February 27 2020 - 6:21AM
Dow Jones News
--Reckitt Benckiser has booked a GBP5 billion write-down on its
acquisition of Mead Johnson
--The company swung to a net loss for 2019 on the back of the
Mead Johnson charge and a settlement on U.S. opioid-addiction drug
probes
--The company warned that its outlook for 2020 is uncertain due
to the coronavirus epidemic
By Matteo Castia
Reckitt Benckiser Group PLC said Thursday that it has taken a
5.04-billion-pound ($6.53 billion) hit from its 2017 acquisition of
baby-formula producer Mead Johnson & Company LLC, due to
weaker-than-expected sales growth in China.
The U.K. consumer-goods company said sales growth at Mead
Johnson has been weaker than hoped at the time of the acquisition,
particularly due to challenges in China, and that the integration
of the business within its health operations has progressed more
slowly than anticipated.
Reckitt--which houses Dettol, Harpic and Durex among its
brands--said that the charge, together with a $1.40 billion
settlement with the U.S. Department of Justice related to its
former pharmaceuticals unit Indivior PLC and a GBP898 million
expense coming from discontinuing operations, paved the way for a
swing to net loss in 2019.
The group posted a net loss of GBP3.68 billion for the year
ended Dec. 31, 2019, contrasting a profit of GBP2.16 billion a year
earlier. Reckitt booked a pretax loss of GBP2.11 billion, compared
with a GBP2.72 billion profit in 2018.
Revenue for the year rose 2% year-on-year to GBP12.85 billion,
while on a like-for-like basis sales were up 0.8%. This compares
with a guidance of 0%-2% growth given last October.
"We ended 2019 broadly in line with our expectations for net
revenue growth and adjusted operating profit from October," Chief
Executive Laxman Narasimhan said.
The company said it expects like-for-like revenue growth to be
higher in 2020 than last year, but warned that there is uncertainty
due to the coronavirus epidemic.
Write to Matteo Castia at matteo.castia@dowjones.com
(END) Dow Jones Newswires
February 27, 2020 06:06 ET (11:06 GMT)
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