Johnson & Johnson Beats Expectations, Boosts Guidance -- Update
April 19 2016 - 11:30AM
Dow Jones News
By Anne Steele and Jonathan D. Rockoff
Johnson & Johnson raised its guidance for the year as the
health-care giant beat earnings expectations in the first quarter
despite foreign exchange rates depressing revenue growth.
The New Brunswick, N.J., company now expects earnings for the
year of $6.53 to $6.68 a share, up from previous guidance for $6.43
to $6.58 a share. J&J anticipates revenue of $71.2 billion to
$71.9 billion, compared with previous guidance for $70.8 billion to
$71.5 billion.
"Our pharmaceuticals business continues to deliver impressive
levels of growth, we have steady improvement in our consumer
business, and we are seeing momentum in our medical-devices
businesses, all of which are fueling our optimism for the full year
ahead," Chief Executive Alex Gorsky said in a statement.
J&J's pharmaceutical business, the company's largest, grew
5.9% to $8.18 billion, lifted by a 12.9% increase in U.S.
pharmaceutical sales. Strong sales of the diabetes drug Invokana,
blood-cancer drug Imbruvica, blood-thinner Xarelto and multiple
myeloma drug Darzalex, offset lower sales of the hepatitis C drug
Olysio, which has been outflanked by newer drugs.
Other J&J businesses didn't perform as well as its
pharmaceuticals business, however.
In the first quarter, sales of J&J consumer health products
fell 5.8% to $3.2 billion, largely due to Venezuela's devaluation
of its currency. The consumer business has been recovering from
supply-chain problems that led to recalls. Executives said they
believe the unit has turned a corner.
Chief Financial Officer Dominic Caruso dismissed speculation
J&J would consider selling its consumer business. "Our
broadly-based business is the right approach. It certainly has
served us well and we expect it will continue to serve us well as
health-care evolves," he told analysts during a conference
call.
J&J's medical device sales fell 2.4% to $6.11 billion, which
represents about 35% of the company's revenue.
The medical-device business used to be J&J's largest, but it
has stumbled amid pricing pressures, increased competition and
market changes. In response, J&J has exited certain areas,
rejiggered how it sells devices and focused on high-growth
categories like robotics and staplers. In January, J&J
announced plans to cut about 3,000 jobs in its medical-devices
division, or about 2.5% of the company's total workforce.
J&J ended the quarter with $17 billion in net cash. Mr.
Caruso indicated the company would look to deploy the capital
toward acquisitions, but said J&J was willing to wait for "the
right deal at the right time with the right party at the right
valuation."
Mr. Caruso singled out biotech and medical device companies as
having inflated valuations.
For the company overall, earnings in the first quarter fell to
$4.29 billion, or $1.54 a share, from $4.32 billion, or $1.53 a
share, in the same period last year. Excluding certain items,
J&J had earnings of $1.68 a share in the latest quarter.
Revenue edged up 0.6% to $17.48 billion. Unfavorable currency rates
shaved 3.3% off the latest quarter's total.
Analysts had projected earnings of $1.65 a share on $17.48
billion in revenue, according to Thomson Reuters.
With about half of its sales overseas, J&J's results have
been pressured lately by a strengthening U.S. dollar and weakness
in some emerging markets.
Write to Anne Steele at Anne.Steele@wsj.com and Jonathan D.
Rockoff at Jonathan.Rockoff@wsj.com
(END) Dow Jones Newswires
April 19, 2016 12:15 ET (16:15 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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