WASHINGTON: Johnson & Johnson (J&J) rode sales of the cancer treatment Darzalex and other key drugs to a better-than-expected second quarter, but exchange rates again pinched the health care giant’s 2022 forecast.
After trimming its forecast in April citing exchange rates, the company did so again Tuesday to a range below analyst expectations. Johnson & Johnson, which brings in nearly half of its sales from outside the United States, said foreign exchange rates delivered a USD 1.5 billion hit to sales in the quarter.
The strong U.S. dollar is nearing parity with the euro for the first time in decades, and that can affect sales for companies that do a lot of international business. They have to convert those sales into dollars when they report earnings.
A stronger dollar decreases the value of those sales. It also gives foreign products a price edge in the United States.
Johnson & Johnson said on Tuesday that it now expects adjusted earnings of USD 10 to USD 10.10 per share this year, down from the USD 10.15 to USD 10.35 it forecast in the spring.
Wall Street had been expecting earnings of USD 10.19 per share, according to FactSet.
In the second quarter for Johnson & Johnson, sales of the blood cancer treatment Darzalex jumped 39 per cent to nearly USD 2 billion. Sales of J&J’s one-shot COVID-19 vaccine, which debuted last year, totalled USD 544 million, with only USD 45 million coming from the United States.
US regulators in May strictly limited who can receive Johnson & Johnson’s COVID-19 vaccine due to the ongoing risk of rare but serious blood clots. That came a month after J&J said it was suspending sales projections for the vaccine, from which it doesn’t intend to profit.
Outside pharmaceuticals, which make up J&J’s biggest business, sales slipped for the company’s medical device and consumer health segments but grew slightly when not counting exchange rates.
J&J said last fall it will split off its consumer health business, which sells Band-Aids and beauty products, into a separate, publicly traded company. That will allow the world’s largest maker of health care products to focus on pharmaceuticals and medical devices.
Chief Executive Officer Joaquin Duato told analysts on Tuesday that the company was on track to complete the separation next year.
Overall, J&J’s quarterly profit plunged 23 per cent to USD 4.81 billion in the second quarter compared with last year's quarter, when earnings jumped as hospitals and the rest of the healthcare industry recovered from the initial impact of the pandemic.
Adjusted earnings per share totalled USD 2.59 and sales grew 3 per cent to USD 24.02 billion. Industry analysts expected earnings of USD 2.54 per share on USD 23.77 billion in revenue. Shares of the New Brunswick, New Jersey, closed Tuesday down USD 2.54, or 1.5 per cent, to USD 171.69.
The stock price has risen 0.4 per cent so far this year while the Dow Jones industrial average, of which J&J is a member, has dropped 12.4 per cent.