Johnson & Johnson Trims Full-Year Guidance on Stronger Dollar
Johnson & Johnson
JNJ 0.01%
reported a profit decline for the latest quarter and cut its full-year sales and profit guidance, as a stronger U.S. dollar, macroeconomic pressures and the Covid-19 pandemic hit results of the healthcare-products company.
The New Brunswick, N.J.-based company, which makes Tylenol and Band-Aid, said Tuesday inflation has contributed to an increase in its costs for items including raw materials and transportation, which cut into its gross profit margins for the second quarter.
As a result, J&J is being more selective in its spending including hiring new employees, Chief Financial Officer
Joseph Wolk
said.
“It’s forcing us to probably be a little bit more discretionary in terms of investments we’re able to make,” he said. He added that J&J will give priority to research and development, however, for which spending rose 9.1% in the second quarter.
The company now sees full-year sales up between 2.1% and 3.1%, down from a prior guidance of 3.8% to 4.8%. J&J now expects adjusted earnings for the year to grow between 2.1% and 3.1%, down from a prior forecast of 3.6% to 5.6%. Johnson & Johnson said on Tuesday the lowered view is largely due to the stronger dollar.
The new guidance comes as the company reported a 3% increase in sales in its second quarter. Currency-exchange trends reduced overall sales growth by 5 percentage points.
J&J’s pharmaceutical unit, which makes the cancer drug Darzalex, continued to post strong growth, which helped offset declines in its medical-device and consumer-health units. Pharmaceutical sales rose 6.7%, versus a 1.1% decline in medical-device sales and a 1.3% decrease in consumer-health sales.
Tight Covid-19 pandemic restrictions in China reduced hospital procedures that used J&J medical devices, which curbed overall sales growth for the device division, Mr. Wolk said.
J&J’s new chief executive,
Joaquin Duato,
said Tuesday the company continues to pursue mergers and acquisitions, and that beefing up the medical-device unit is a top priority for deals.
J&J logged $544 million in revenue for its Covid-19 vaccine, with international buyers accounting for most of those sales. U.S. vaccine sales declined about 11.5%. In the same period a year earlier, the company’s Covid-19 vaccine sales were $164 million.
But the company also took a second-quarter charge of about $276 million for a reduction in research and manufacturing capacity for the shots, citing a global surplus of Covid-19 vaccine doses.
The shot is one of four vaccines for Covid-19 authorized or approved in the U.S., with
Novavax Inc.’s
vaccine most recently winning authorization. But use of the J&J shot in the U.S. has lagged behind that of vaccines developed by rival manufacturers
Moderna Inc.
and
Pfizer Inc.
U.S. health regulators briefly paused the use of the J&J vaccine in April of last year as they investigated rare blood-clotting conditions.
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What is your outlook for Johnson & Johnson’s business? Join the conversation below.
About 17.1 million Americans have been vaccinated with Johnson & Johnson’s single-dose shot, a fraction of the number who have been immunized with shots made by Moderna and by Pfizer and
BioNTech SE,
according to data from the Centers for Disease Control and Prevention. Those companies’ booster shots have also seen far more use in the U.S. than Johnson & Johnson’s.
In the second quarter, Johnson & Johnson posted overall sales of $24 billion, compared with $23.3 billion a year earlier. Analysts surveyed by FactSet were expecting quarterly sales of $23.77 billion.
Profit was $4.81 billion, or $1.80 a share, down from $6.28 billion, or $2.35 a share, a year earlier. Adjusted for one-time costs, Johnson & Johnson’s per-share profit was $2.59. Wall Street analysts had been forecasting an adjusted profit of $2.54, according to FactSet.
J&J reiterated its plan to separate its consumer-health business into a stand-alone company in 2023. The move will leave J&J with its pharmaceutical and medical-device units.
Write to Peter Loftus at [email protected] and Will Feuer at [email protected]
Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
Johnson & Johnson
JNJ 0.01%
reported a profit decline for the latest quarter and cut its full-year sales and profit guidance, as a stronger U.S. dollar, macroeconomic pressures and the Covid-19 pandemic hit results of the healthcare-products company.
The New Brunswick, N.J.-based company, which makes Tylenol and Band-Aid, said Tuesday inflation has contributed to an increase in its costs for items including raw materials and transportation, which cut into its gross profit margins for the second quarter.
As a result, J&J is being more selective in its spending including hiring new employees, Chief Financial Officer
Joseph Wolk
said.
“It’s forcing us to probably be a little bit more discretionary in terms of investments we’re able to make,” he said. He added that J&J will give priority to research and development, however, for which spending rose 9.1% in the second quarter.
The company now sees full-year sales up between 2.1% and 3.1%, down from a prior guidance of 3.8% to 4.8%. J&J now expects adjusted earnings for the year to grow between 2.1% and 3.1%, down from a prior forecast of 3.6% to 5.6%. Johnson & Johnson said on Tuesday the lowered view is largely due to the stronger dollar.
The new guidance comes as the company reported a 3% increase in sales in its second quarter. Currency-exchange trends reduced overall sales growth by 5 percentage points.
J&J’s pharmaceutical unit, which makes the cancer drug Darzalex, continued to post strong growth, which helped offset declines in its medical-device and consumer-health units. Pharmaceutical sales rose 6.7%, versus a 1.1% decline in medical-device sales and a 1.3% decrease in consumer-health sales.
Tight Covid-19 pandemic restrictions in China reduced hospital procedures that used J&J medical devices, which curbed overall sales growth for the device division, Mr. Wolk said.
J&J’s new chief executive,
Joaquin Duato,
said Tuesday the company continues to pursue mergers and acquisitions, and that beefing up the medical-device unit is a top priority for deals.
J&J logged $544 million in revenue for its Covid-19 vaccine, with international buyers accounting for most of those sales. U.S. vaccine sales declined about 11.5%. In the same period a year earlier, the company’s Covid-19 vaccine sales were $164 million.
But the company also took a second-quarter charge of about $276 million for a reduction in research and manufacturing capacity for the shots, citing a global surplus of Covid-19 vaccine doses.
The shot is one of four vaccines for Covid-19 authorized or approved in the U.S., with
Novavax Inc.’s
vaccine most recently winning authorization. But use of the J&J shot in the U.S. has lagged behind that of vaccines developed by rival manufacturers
Moderna Inc.
and
Pfizer Inc.
U.S. health regulators briefly paused the use of the J&J vaccine in April of last year as they investigated rare blood-clotting conditions.
SHARE YOUR THOUGHTS
What is your outlook for Johnson & Johnson’s business? Join the conversation below.
About 17.1 million Americans have been vaccinated with Johnson & Johnson’s single-dose shot, a fraction of the number who have been immunized with shots made by Moderna and by Pfizer and
BioNTech SE,
according to data from the Centers for Disease Control and Prevention. Those companies’ booster shots have also seen far more use in the U.S. than Johnson & Johnson’s.
In the second quarter, Johnson & Johnson posted overall sales of $24 billion, compared with $23.3 billion a year earlier. Analysts surveyed by FactSet were expecting quarterly sales of $23.77 billion.
Profit was $4.81 billion, or $1.80 a share, down from $6.28 billion, or $2.35 a share, a year earlier. Adjusted for one-time costs, Johnson & Johnson’s per-share profit was $2.59. Wall Street analysts had been forecasting an adjusted profit of $2.54, according to FactSet.
J&J reiterated its plan to separate its consumer-health business into a stand-alone company in 2023. The move will leave J&J with its pharmaceutical and medical-device units.
Write to Peter Loftus at [email protected] and Will Feuer at [email protected]
Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
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