Sales & Earnings In Brief
This article was originally published in The Tan Sheet
Executive Summary
Sanofi’s Allegra down from year-ago launch as stocking declines; competitive China landscape weighs on Mead Johnson; GNC revenue up double digits across segments; Claritin shows life in Merck consumer unit; USANA reports return to Western growth; Nu Skin preps ageLOC weight management launch.
Sanofi’s Allegra down from year-ago launch
The excess retail stocking of Allegra in early 2011 in conjunction with its OTC launch dragged on Sanofi’s fiscal 2012 second-quarter U.S. consumer performance, down 3.4% at constant exchange rates to $190 million (€157 million). Sales of Allegra dropped 23.7% to $65.4 million, though Sanofi President of Global Operations Hanspeter Spek said during a July 26 earnings call the French firm is “extremely content with its performance” with consumers despite the lower stocking levels. Sanofi consumer health care sales were more robust outside the U.S., up 11.3% at constant exchange to $893.5 million worldwide in the second quarter, including a 26.9% increase in emerging markets aided by the year-ago acquisition of nutraceuticals from India’s Universal Medicare Pvt. Ltd. (Also see "Sales & Earnings In Brief" - Pink Sheet, 30 Apr, 2012.). Sanofi highlighted the strong performance of Essentiale liver supplement, Lactacyd for feminine hygiene and Maalox antacids, among other OTCs in emerging markets.
Overall, Sanofi net sales hit $10.74 billion in the quarter, 6.2% higher on a reported basis but only 0.4% higher at constant exchange, due to the depreciating euro. Net income in the quarter rose 16.4% to $1.42 billion. In the first half, net sales climbed a reported 7.8%, or 3.6% operationally, to $21.04 billion, with net income up 34.8% to $3.63 billion.
Competitive China weighs on Mead Johnson
A dip in market share in China during the second quarter leads Mead Johnson Nutrition Co. to lower its full-year sales outlook – from a previously expected growth rate between 9% and 11%, to a new range of 8% to 9%. During a July 26 earnings call, executives said the market share fluctuation likely is a temporary result of China’s competitive landscape, and occurs as the overall Chinese market for pediatric nutritionals slows. Mead Johnson said the U.S. business showed improvement after a slowdown in early 2012 following unfounded negative media reports about a formula product, and overall net sales reached $1.01 billion, up 8.6%, in the quarter. Net earnings increased 26.8% to $171.1 million, though gross margin was 1.5 percentage points lower due to higher commodity costs and lower North America/Europe production volume, the Glenview, Ill., firm said.
GNC revenue up double digits across segments
The sports nutrition retailer reports another quarter of sizable growth, with overall revenue up in the April-June period 19.4% to $619.1 million. [GNC Holdings Inc.] said July 26 that second-quarter retail segment sales increased 19.3% to $458.6 million, including a 27.9% expansion in e-commerce activity. Revenue from the franchise segment climbed 25% to $103.5 million while the manufacturing/wholesale business was up 10.7% to $56.9 million, Pittsburgh-based GNC said. Adjusted net income totaled $66.7 million in the quarter, up 61.5%. Looking ahead, GNC expects consolidated revenue to grow 17.5% over last year to $2.43 billion in 2012. On a same-day call, executives said the controversy surrounding strength-training product ingredient dimethylamylamine is not affecting GNC revenues as the company has “made very concerted efforts to move away from DMAA products in the stores” and replacement offerings are selling at a faster pace (Also see "In Brief" - Pink Sheet, 4 Jun, 2012.).
Claritin shows life in Merck consumer unit
Sales of OTC allergy brand Claritin increased 8.2% to $145 million in the second quarter, though Merck & Co. Inc. reports its consumer care unit grew a relatively muted 2% to $552 million in the April-June period, including a 1 percentage point loss from foreign exchange. The MiraLAX laxative brand and Coppertone sun care products helped nudge consumer care upward, the Whitehouse Station, N.J., firm said July 27. Merck reported overall net sales of $12.31 billion in the quarter, 1.3% higher as reported or 5% operationally. Second-quarter net income declined 11.4% to $1.79 billion, reflecting in large part a one-time $700 million income tax benefit in the year-ago quarter.
USANA reports return to Western growth
Net sales in the North America/Europe region inched up 3.6% to $62.5 million in the second quarter for USANA Health Sciences Inc. after the firm realized stronger performance in the U.S. and Mexico, and expanded into Belgium and France. Asia Pacific continues as the multi-level marketer’s major growth driver, up 11% to $98.4 million, USANA said July 24. Overall net sales climbed 8% to $160.9 million in the April-June period and 7.7% to $315 million in the first half, leading the Salt Lake City company to increase its 2012 sales guidance to between $630 million and $640 million, compared to a previous range of $610 million to $625 million. Net earnings jumped nearly 21% in both the quarter and the half, to $16.7 million and $30.5 million, respectively. During a July 25 earnings call, USANA CEO Dave Wentz said the recently introduced lifetime matching bonus benefit for sales associates aims to incentivize long-term sales performance and recruit new distributors. Overall associates totaled 235,000 at the end of June, up 5.9% over the prior year, though the North America/Europe associate ranks contracted 1.2% to 82,000.
Nu Skin preps ageLOC weight management launch
The ageLOC nutritional and personal care brand will expand into weight management in 2013, including supplements and meal-replacement products, as Nu Skin Enterprises Inc. aims to address obesity issues in its rapidly growing Asian markets. The Provo, Utah, company reported dramatic second-quarter sales growth in China, up 151.5% to $199.7 million, and in South Asia/Pacific, up 66.1% to $98.3 million, as the ageLOC platform continues to roll out new products. Overall revenue in the second quarter reached $593.2 million, a gain of 39.8%, while net income was 44.9% higher at $60.4 million. First-half net income nearly doubled to $108.2 million, but that reflects a negative customs ruling in Japan that ate into the year-ago bottom line (Also see "Sales & Earnings In Brief" - Pink Sheet, 8 Aug, 2011.).