Reckitt Benckiser to review baby formula business in Greater China

UK-based multinational consumer goods company Reckitt Benckiser is to review its baby formula business in Greater China, four years after the unit was acquired from Enfamil infant formula manufacturer Mead Johnson in 2017 for $17.9bn.

The strategic investment review announcement was made by Reckitt Benckiser CEO Laxman Narasimhan while revealing the company’s 2020 results.

Narasimhan said: “We are taking decisive action to strengthen our portfolio with a strategic review of the infant formula business in Greater China already underway.”

The review of the company’s infant nutrition business in Greater China is said to be Narasimhan’s major portfolio revamp after assuming the CEO position in late 2019.

The British firm said that the infant nutrition business in Greater China represents 6% of the group’s total revenue of £14bn.

In a statement, Reckitt Benckiser said: “The Greater China business remains a focus area for the group as we seek to improve operational performance and continue our review and analysis of strategic options. We will provide further updates through 2021.

“Performance of infant formula in Greater China, which represents around 25% of our nutrition business and around 6% of group revenues, was adversely impacted by ongoing restrictions on cross-border trade activity between Hong Kong and mainland China.

“We continue to compete well with our multinational peers and grow share in the high-premium and super-high-premium market. However, a slowing rate of premiumisation and more competition from local suppliers is expected to reduce growth opportunities in the near-term.”

In 2017, Reckitt Benckiser sold its food business unit to McCormick & Company (McCormick) for $4.2bn on a cash-free, debt-free basis.