J&J sales grow, but strong dollar tugs at expectations

Johnson & Johnson topped third-quarter expectations thanks to pharmaceutical sales growth, but a strong dollar made the health care giant tread cautiously again with its outlook.

J&J on Tuesday narrowed its 2022 forecast and stuck to the midpoint of its previous range after lowering expectations earlier this year due to the impact of currency exchanges.

J&J brings in nearly half of its sales from outside the United States. A strong US dollar – now worth more than a euro for the first time in 20 years – can affect sales for companies that do a lot of international business.

They have to convert those sales into dollars when they report earnings. The stronger dollar decreases the value of those sales. It also gives foreign products a price edge in the United States.

In the third quarter, J&J’s profit climbed 22 per cent to US$4.46 billion. Revenue rose 2 per cent to US$23.79 billion, and adjusted earnings totalled US$2.55 per share.

Analysts were expecting earnings of US$2.48 per share on US$23.36 billion in revenue, according to FactSet.

ADJUSTED EARNINGS

Revenue from the company’s biggest segment, pharmaceutical, climbed 2.6 per cent – or 9 per cent without the impact of foreign exchange – to US$13.2 billion. That business was charged by sales of the blood cancer treatment Darzalex, which soared nearly 30 per cent to US$2.06 billion.

J&J also brought in US$2.45 billion in worldwide sales from Stelara, which treats psoriasis and other inflammatory disorders.

The company recorded no US sales in the quarter from its one-shot COVID-19 vaccine, which brought in US$489 million in revenue from international markets.

J&J’s vaccine was one of three initially authorised by United States regulators to protect against COVID-19. Interest in the preventive shots has since waned, and the government has strictly limited who can receive J&J’s shot due to a small risk of rare but serious blood clots.

Sales climbed 2 per cent in the company’s medical device segment, to US$6.78 billion, while revenue slipped in consumer health. J&J is spinning off that segment, which sells Band-Aids and beauty products, into a separate, publicly traded company named Kenvue.

For 2022, the company now expects adjusted earnings to range between US$10.02 and US$10.07 per share.

That compares to the US$10 to US$10.10 range the company predicted in July.

FactSet says analysts expect, on average, earnings of US$10.07 per share.

Shares of the New Brunswick, New Jersey, company slipped 78 cents to US$165.81 while broader indexes rose after markets opened Tuesday.

The stock was down 2.6 per cent this year as of Monday’s close. That compares to the roughly 17 per cent drop recorded by the Dow Jones industrial average, of which J&J is a component.

AP