Johnson & Johnson Posts Small Drop in Q1 Profit
Tue, 04/14/2009 - 8:13am
LINDA A. JOHNSON Associated Press Writer TRENTON, N.J. (AP) — Health care products maker Johnson & Johnson said Tuesday its first-quarter profit dipped only slightly, beating Wall Street expectations, despite falling sales around the world. The world's most broadly based health care company said the recession cut into consumer products sales but that the biggest drag on revenue was the stronger dollar, which pulled down overall revenue by 6 percent. The maker of baby shampoo, contraceptives and biotech drugs — a Dow component that is seen as a bellwether for the overall economy — posted net income of $3.5 billion, or $1.26 per share. That's down from $3.6 billion in 2008's first quarter. Earnings per share also amounted to $1.26, because the company has been buying back shares over the past year. Analysts polled by Thomson Financial expected, on average, earnings per share of $1.22 and revenue of $15.47 billion. Revenue fell just over 7 percent, to $15 billion. Sales of its consumer health products, prescription drugs and medical devices all fell. Still, the New Brunswick, N.J.-based company confirmed its previous forecast for a 2009 profit ranging from $4.45 to $4.55 per share, excluding one-time items. Wall Street liked the results, pushing up shares of Johnson & Johnson 85 cents, or 1.7 pecdent, to $52. "The underlying business is growing at approximately 4 percent," Chief Financial Officer Dominic Caruso said in an interview. He said he expected at the beginning of the year that the stronger dollar would reduce 2009 sales by about 4 percent but now thinks it will be 5 percent. Caruso told analysts during a conference call that he expects total sales for the year to be $60 billion to $61 billion, just below his January forecast, but well below 2008 revenue of $63.8 billion. Caruso noted four different prescription drugs, each with anticipated sales of more than $1 billion a year, could get approved for U.S. sales between April and August. The first-quarter profit fell even though J&J cut costs by roughly 10 percent across marketing and administration, research and production. Sales declined across all three company business units. Consumer sales fell nearly 9 percent, to $3.7 billion, as significant drops in baby care, women's health and over-the-counter products were only partly offset by strong sales in skin care. New Listerine products limited the sales drop for oral care items, but J&J said it has shut down sales of its baby bath and skin care products through its babycenter.com site. Prescription drug sales fell 10 percent to $5.8 billion. The company cited generic competition to three products that together pulled down pharmaceutical sales by 10 percent: its blockbuster antipsychotic drug, Risperdal; Razadyne for Alzheimer's disease-related dementia, and Topamax for epilepsy and migraines. Excluding that impact, pharmaceutical sales would have been flat, and up 5 percent excluding the negative affects of a stronger dollar, the company said. J&J also cited lower sales of Procrit, which like other anemia drugs has been hurt by safety warnings and restrictions on sales through government programs. The medical devices and diagnostics business had the best performance, with sales down only 3 percent at $5.5 billion. Revenue was boosted by recent acquisitions including breast implant and cosmetic product maker Mentor Corp., and strong sales of hip and spine replacement parts and a new gastric band for weight loss surgery. "Despite challenging economic and near-term business pressures, we continue to deliver solid financial results," Chief Executive Bill Weldon said in a statement. "We are continuing to make strategic investments in order to bring important new products to market, positioning us well for long-term growth."