Venezuela gets ugly for some U.S. companies

[link to www.usatoday.com]

Venezuela – well-known for its dominance in beauty pageants – is turning ugly for a number of U.S. multinational companies doing business there.

During the past eight weeks, 35 companies in the Standard & Poor's 500, including nutrition supplement company Mead Johnson Nutrition (MJN), MasterCard (MA), Marathon Petroleum (MPC) and Coca-Cola (KO), have specifically called out concerns they have in Venezuela or have discussed how they've separated out results from the region due to the extreme conditions there, according to a USA TODAY analysis of data from S&P Global Market Intelligence. Shares of these 35 companies - on average - are up 1.0% this year - roughly in line with the S&P 500's 1.6% gain, although the influence of the Venezuela influence is likely minor.

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Many companies are separating financial results from Venezuela so investors can clearly see what the effect there is, says John Staszak, analyst at Argus Research. "Multinationals usually discuss separately or de-consolidate Venezuelan operations," he says. "They consider it an unusual item and look at other metrics or regions more closely."

Such separation gives investors the ability to see just how extreme the situation in Venezuela is and also helps identify some companies that are navigating fine. Venezuela was actually a region of strength for packaged foods company Kellogg (K) during the first quarter due to pricing changes by the company there. Omitting price changes in Venezuela, the company's revenue fell 1% factoring out currency swings during the first quarter. But revenue rose 6.6% leaving in Venezuela's results. "We continue to manage the Venezuelan business very carefully, navigating local supply and power outages," said CEO John Bryant in a May call with investors. "Despite this, we gained share in Venezuela in the quarter."