The North America/Europe segment reported sales of $317.6 million for the fourth quarter of 2012, up four percent from $306.5 million in 2011. Sales benefited five percent from price offset by a one percent decline from volume. Higher sales in the United States from gains in non-WIC market share were partially offset by continued category decline from higher breastfeeding rates and the transition of several smaller WIC contracts. Sales growth in the United States was partially offset by lower sales in Europe as we refocused the business on higher margin specialty infant formula products. EBIT totaled $88.9 million, up 39% compared to $64.1 million in the fourth quarter a year ago. The increase was the result of higher sales, improved gross margins from lower U.S. dairy costs and lower operating expenses.
Corporate and Other expenses declined primarily from the timing of pension settlement expense, which was initially triggered in the second quarter of 2012 compared to the fourth quarter of 2011.
Full-Year 2012 Results
For the year ended December 31, 2012, sales totaled $3,901.3 million, up six percent from $3,677.0 million a year ago. Sales growth increased six percent from price and one percent from volume, reduced by one percent from foreign exchange.Gross margin was down 110 basis points in 2012 versus the prior year from higher dairy and other commodity costs, mainly in the North America/Europe segment. Manufacturing variances were also unfavorable, primarily from lower production volume in the North America/Europe segment. EBIT for 2012 totaled $870.0 million, up from $774.1 million a year earlier. The EBIT increase was primarily driven by sales growth. In addition, general and administrative expenses were lower, driven by the reduction in IT and IPO-related separation costs, the elimination of duplicate shared service costs in 2011, and lower performance-based compensation expense. These factors were partially offset by lower gross margins, higher demand-generation investments and increased pension settlement expense.