Forex, Competitive Headwinds Hit Johnson & Johnson's Profit -- 2nd Update
14 October 2015 - 12:20AM
Dow Jones News
By Lisa Beilfuss
Johnson & Johnson said profit dropped in its latest quarter
as adverse exchange rates hit revenue and as the health-care
giant's hepatitis C treatment continues to face competition.
Separately Tuesday, J&J said it plans to buy back up to $10
billion in stock, or about 3.7% of shares outstanding, in a move to
tweak its capital structure. The company said it would issue debt
to fund the program.
The stronger U.S. dollar has pressured J&J's results in
recent quarters. In the latest period, unfavorable currency rates
shaved 8.2% off the top line.
Despite the disappointing revenue figures, J&J lifted its
full-year earnings outlook to $6.15 to $6.20 a share, excluding
certain items, up from an earlier range of $6.04 to $6.19.
In addition to currency headwinds, J&J is facing patent
expirations and increased competition for many of its pharma
products, such as its hepatitis C treatment Olysio. Sales of the
drug have weakened since a rival pill from Gilead Sciences hit the
market, and on Tuesday J&J said lower Olysio sales, due to new
entrants, offset growth in its diabetes drug Invokana, its
blood-cancer drug Imbruvica and its blood-thinner Xarelto. Olysio,
approved in 2013, last year represented about 7% of the company's
overall pharmaceutical sales.
The company is also grappling with competition from lower-cost
knockoffs of its blockbuster anti-inflammatory drug Remicade. In
its prescription drug unit, which has been the New Brunswick, N.J.,
company's bright spot, revenue declined 7.4% to $7.69 billion,
thanks in large part to a stronger dollar that makes its products
more expensive abroad.
Sales at the consumer-health unit fell 7.7% to $3.31 billion as
the foreign exchange effect offset a 3.1% revenue increase driven
by over-the-counter products like Tylenol and personal-care
products including Listerine. The company's medical-device business
continued to struggle and posted a sales decline of 7.3% to $6.09
billion.
In all, J&J reported a profit of $3.36 billion, or $1.20 a
share, down from $4.75 billion, or $1.66 a share, a year earlier.
Excluding items, per-share profit fell to $1.49 from $1.61. Revenue
slid 7.4% to $17.10 billion.
Analysts had projected $1.45 in earnings per share and $17.45
billion in revenue, according to Thomson Reuters.
Shares in the company, up 0.7% this year, declined 2%
premarket.
Write to Lisa Beilfuss at lisa.beilfuss@wsj.com
(END) Dow Jones Newswires
October 13, 2015 09:05 ET (13:05 GMT)
Copyright (c) 2015 Dow Jones & Company, Inc.
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