USA – Reckitt’s supply chain for its infant formula has been disrupted following severe damage to a key warehouse in Mount Vernon, Indiana, caused by a tornado on July 9, 2024.
The affected warehouse, essential for Reckitt’s Mead Johnson Nutrition business, was vital in handling raw materials and finished products for popular brands such as Enfamil and Nutramigen.
Meanwhile, the tornado’s severe impact has halted operations at the facility, which Reckitt was only able to partially access by July 13.
Since the event, the company has redirected all scheduled deliveries to its other North American warehouses to maintain supply continuity since the disruption is expected to affect Reckitt’s nutrition sales in the short term.
Meanwhile, Reckitt is actively working to mitigate the effects of the tornado by collaborating closely with its stakeholders, including customers and suppliers.
The company utilizes its global supply chain and manages inventory at alternate warehouses and retail partners to minimize supply interruptions. Despite these efforts, the company anticipates a temporary impact on its nutrition business.
Fortunately, Reckitt has comprehensive property damage and business interruption insurance. The company expects this insurance to cover most of the financial impact resulting from the tornado.
A detailed update on the expected financial implications will be provided alongside Reckitt’s half-year results report on July 24.
The tornado is the latest challenge for Reckitt’s baby food division, which has been dealing with multiple issues.
In March, Reckitt faced a significant legal setback when an Illinois jury awarded US$60 million in damages to the mother of a baby who died from necrotizing enterocolitis (NEC) after being fed Enfamil Premature 24 infant formula.
Reckitt has announced plans to appeal this verdict, while analysts have highlighted the possibility of up to 400 similar cases in the US, with potential settlement costs projected to be high.
Additionally, Reckitt had to recall Nutramigen Powder in the US and UK last year due to possible contamination with Cronobacter sakazakii bacteria. Subsequent tests confirmed that the pathogen was not present in the recalled batches.
In response to these ongoing challenges, Reckitt CEO Kris Licht has been asked about the future of the Mead Johnson business.
While Licht has indicated that discussions about structural changes are premature, he has emphasized the company’s commitment to addressing litigation issues and navigating the ongoing difficulties.
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