J&J Beats Profit Expectations

Growth in its non-pharmaceutical segments help push the drugmaker to a 6-cent EPS beat.
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Johnson & Johnson

(JNJ) - Get Report

jetted past Wall Street's second-quarter earnings targets Tuesday, benefitting from foreign exchange rates and growth in its non-pharmaceutical segments. The company also increased its full-year 2008 outlook.

Shares were up $1.06, or 1.6%, at $67.47 in recent trading Tuesday morning.

The New Brunswick, N.J.-based drug and health-care products company recorded profit of $3.3 billion, or $1.17 a share. Factoring out an R&D charge of $40 million tied to its Amic acquisition, the company said it earned $3.4 billion, or $1.18 a share. Sales increased 8.7% year over year to $16.5 billion.

Wall Street analysts, on average, were looking for $1.12 a share on revenue of $16 billion, according to Thomson Reuters.

Worldwide Medical Devices and Diagnostics sales increased 12.1% year over year to $6.1 billion with a positive impact from currency of 6.4%. U.S. sales increased 4%, while international sales climbed 19.7%, including a 12.4% benefit from currency.

Consumer sales increased 13.2% to $4 billion on a worldwide basis -- with an 8.5% increase in U.S. sales and a 17% increase in international sales (11.4% of that from currency). The company said these increases reflect the U.S. launch of over-the-counter Zyrtec, and strong sales of Listerine and whitening products, baby care products and skin care lines Neutrogena, Clean & Clear and Aveeno.

Currency helped out declining pharmaceutical sales. Worldwide Pharmaceutical sales grew just 3.1% to $6.3 billion -- with an operational decline of 1.3% and a positive impact from currency of 4.4%. U.S. sales decreased 1.7%, and international sales increased 11.3%, including an operational decline of 0.6% and a positive currency impact of 11.9%.

J&J said pharmaceutical growth was negatively impacted by a decline in sales of anemia drug Procrit and generic-drug competition for antipsychotic drug Risperdal Oral outside of the U.S. The company lost U.S. exclusivity of the drug on June 29, and announced its launch of a generic on June 30.

"We are successfully managing through short-term pressures while continually making progress to enhance our long-term growth," said CEO William Weldon in the earnings release.

Within the second quarter, J&J captured Food and Drug Administration approval of wrinkle filler Evolence. U.S. regulators also approved its supplemental new-drug application for Concerta for adults with attention defiicit hyperactivity disorder. Since the close second quarter, on July 1, the company received an FDA OK for its One Touch Ping Glucose Management System, an insulin pump that wirelessly communicates with a blood glucose remote.

Looking ahead, J&J upped its earnings guidance for the full year to $4.45 to $4.50 a share, factoring out one-time charges.