Johnson & Johnson Profit Up Slightly, Despite Lower Sales
Health care giant Johnson & Johnson eked out a 2 percent profit increase in its third quarter, even though sales were down slightly, hurt by repeated product recalls and customer wariness.
Johnson & Johnson said Tuesday that sales in the consumer products division plunged nearly 11 percent in the last quarter, to $3.57 billion.
Other divisions did much better, so J&J's net income edged up to $3.42 billion, or $1.23 per share.
A year earlier, net income was $3.35 billion, or $1.20 per share.
The maker of baby shampoo, contraceptives and biotech drugs has taken a black eye over 13 product recalls in as many months, most of them involving nonprescription medicines such as Tylenol and Motrin.
The most recent, involving Tylenol caplets, was just announced Monday evening.
The consumer product recalls forced the closure of one factory this past spring and have cut sales of consumer products, with J&J earlier estimating a loss of $600 million this year alone.
Sales for the whole company were $14.98 billion, down almost a percent from $15.08 in 2009's third quarter.
Still, the sales and profit figures beat the expectations of analysts polled by Thomson Reuters.
They were anticipating earnings per share of $1.15 and revenue of $15.18 billion.
Sales of prescription drugs were up 4.7 percent, to $5.5 billion, and medical device sales increased 1.3 percent to $5.92 billion.
It was a different story in the consumer division, known for such iconic brands as Band-Aids, No More Tears baby shampoo and Listerine.
Sales were down in every business segment except baby care, as the recession continues to push penny-pinching shoppers to opt for cheaper store brands, a problem J&J executives have been citing for about two years.
The worst drop, though, was in the business that sells nutrition products and nonprescription medicines such as those that have been recalled.
Its sales were down 40 percent in the U.S. and 21 percent worldwide, at $1.11 billion.
J&J also raised its earnings forecast for 2010, to $4.70 to $4.80 per share, up from its July forecast of $4.65 to $4.75.
Those figures exclude the effect of one-time items.
Ten of the recalls have involved nonprescription medicines, from children's Tylenol and Motrin to Benadryl and Rolaids.
The others have involved contact lenses, faulty blood glucose test strips and hip implants causing enough pain that many had to be replaced.
For the first nine months, New Brunswick, N.J.-based J&J reported net income of $11.39 billion, or $4.08 per share, up from $10.06 billion, or $3.61 per share, in the first three quarters of 2009.
Sales totaled $45.94 billion, up 1.3 percent from $45.35 billion a year earlier.