Mead Johnson Nutrition (MJN) Hit as Hong Kong Limts Flow of Milk Products

February 25, 2013 8:29 AM EST Send to a Friend
Mead Johnson Nutrition Company (NYSE: MJN) is trading down 5 percent in pre-open trading after the Hong Kong government imposed a regulation designed to limit the flow of milk products out of the territory. Approximately 30 percent of Mead Johnson sales in the China/Hong Kong market originate in Hong Kong

From the filing:
As a result of significant cross-border trading in formula milk products between Hong Kong and mainland China, the Hong Kong government has imposed a regulation designed to limit the flow of those products out of the territory. Effective March 1, 2013, to ensure adequate supplies for local infants and young children, the authorities will limit travelers departing Hong Kong to 1.8 kilograms (equivalent to two 32-ounce cans) of formula milk for children up to 36 months of age.

Approximately 30 percent of Mead Johnson sales in the China/Hong Kong market originate in Hong Kong. It is believed that a substantial portion of the products sold in Hong Kong are taken to mainland China by visitors and private resellers.

At this time, no change is being made to the Company’s most recent earnings guidance. It is difficult to quantify the potential net impact, if any, of the restriction on the company’s overall China/Hong Kong business. The Company will carefully monitor retailer orders and consumer purchases across the China/Hong Kong market following the implementation of the new restriction to determine if any reduction in Hong Kong purchases by visitors and resellers may be offset by increased demand in mainland China. The Company will consider actions as necessary to address any changes in market dynamics that may result from the new regulation.


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