Reckitt warns over hit to baby formula sales after tornado damages US warehouse

The Nurofen-to-Dettol maker said its third party warehouse in Mount Vernon, Indiana, suffered ‘significant damage’ from the tornado.

A new probe into the supply of baby formula milk has been launched by Britain’s competition watchdog after it found that prices had soared by 25% in the past two years (PA)

Household goods giant Reckitt Benckiser has cautioned over a hit to sales of Mead Johnson baby formula powder after a warehouse in America was struck by a devastating tornado.

The Nurofen-to-Dettol maker said its third party warehouse in Mount Vernon, Indiana, suffered “significant damage” from the tornado last week.

It confirmed that all employees are safe, but said there would be a short-term hit to sales, given the importance of the warehouse for the Mead Johnson Nutrition business, which makes baby formula.

The group confirmed that the site is covered by property damage and business interruption insurance, which it hopes will “largely offset” the knock on effect on earnings.

Reckitt said: “The Mount Vernon warehouse is an important site for the Mead Johnson Nutrition business, containing a mix of raw materials and finished products.

“Whilst Nutrition sales will likely be affected in the short term, we are working closely with all our stakeholders including customers and suppliers, to minimise disruption, by leveraging our global supply chain and managing inventory at our other North American Nutrition warehouses and held by our retail partners.”

Reckitt said it is diverting all inbound deliveries to its other warehousing facilities across the US.

It will update further on the situation at its half year results on July 24.

Analysts at Jefferies said they estimate the issue could lead to a quarterly loss of sales of around £60 million, with a profit contribution loss of up to £40 million, but added this was likely to be largely insurance covered.