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Indiana warehouse damaged by July 9 tornado

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Company sees insurance largely covering any earnings

impact

(Adds comments from Reckitt spokesperson, background)

By Richa Naidu and Yadarisa Shabong

July 17 (Reuters) - Sales of Reckitt's Mead

Johnson baby formula powder are likely to take a short-term hit

after a tornado damaged a third-party warehouse in the United

States, the British consumer goods company said on Wednesday.

The Mount Vernon warehouse in Indiana, out of action since

the tornado struck on July 9, is an important site for the

company's Mead Johnson Nutrition business, containing both raw

materials and finished products, Reckitt said.

All employees are safe, the company added, saying it had

diverted deliveries to other warehouses in the United States.

Some nutrition SKUs (product varieties) will likely be

affected in the short term, a Reckitt spokesperson said.

The company could not estimate when the warehouse would be

up and running again, but said it was working as quickly as

possible with local authorities and regulators to minimise the

disruption.

"We are partnering with customers and suppliers on expedited

recovery efforts to minimise disruption by leveraging our global

supply chain and managing inventory at our other U.S.

warehouses," the spokesperson said.

This is not the first time Reckitt has had to rely on its

worldwide supply chain in an emergency, which can take time

because of the regulatory hurdles the company needs to clear

with the U.S. Food & Drug Administration (FDA).

In 2022, during a months-long U.S. shortage of baby formula,

Reckitt flew 65 tons of baby formula to Chicago from its plant

in Singapore. A few months before, it said it was working with

the FDA to increase baby formula supply, including expediting

the approval of some products made at a facility in Mexico.

Reckitt said on Wednesday it had comprehensive property

damage and business interruption insurance, which it expects

will largely offset the impact on earnings.

This marks a third setback for the company this year.

In February, an investigation showed some employees had

under-reported liabilities in the Middle East, triggering the

biggest one-day drop in Reckitt's shares since December 1999.

A month later, the stock tumbled again after an Illinois

jury ordered Reckitt's Mead Johnson unit to pay $60 million to

the mother of a premature baby who died of an intestinal disease

after allegedly being fed one product made by the company's

Enfamil baby formula brand.

Reckitt's stock, which was down 0.5% on Wednesday morning,

has lost about 21% so far this year.