J&J Lifts Earnings Outlook Despite Stronger Dollar, Competition--Update

By Chelsey Dulaney 

Johnson & Johnson on Tuesday nudged up its earnings guidance for the year as results topped expectations in its second quarter despite the impacts of a strong dollar and competition for its hepatitis C treatment.

J&J said it now expects to post per-share earnings of $6.10 a share to $6.20 a share, up from its previous guidance of $6.04 a share to $6.19 a share. The company is benefiting from growth in its new diabetes and anticlotting treatments.

Shares, relatively flat over the past three months, edged up 0.7% in premarket trading.

New Brunswick, N.J.-based J&J is facing patent expirations and increased competition for many of its pharma products, such as its hepatitis C treatment Olysio. It also is preparing for the threat of increased competition in the U.S. from lower priced biosimilar versions of its blockbuster anti-inflammatory drug Remicade.

Meanwhile, the strengthening of the U.S. dollar against foreign currencies has hamstrung J&J and many of its health-care peers in recent quarters. J&J said foreign-exchange rates had a negative impact of 7.9% in the quarter.

Overall, J&J's pharmaceutical sales fell 6.6% to $7.9 billion in the quarter, as currency impacts and lower Olysio sales offset 1% operational growth. J&J noted that a number of new drugs helped drive operational growth in the quarter. Its Type 2 diabetes treatment Invokana saw sales surge 30.7% to $472 million, while sales of anticlotting treatment Xarelto jumped to $1.65 billion from $1.38 billion a year ago.

Meanwhile, consumer sales fell 7% to $3.5 billion, as a 9.3% currency hit offset 2.3% operational growth. J&J said it was helped by sales of Zyrtec allergy medications and Tylenol analgesics.

Excluding acquisitions, divestitures, and hepatitis C sales, J&J's total underlying operational growth was 5%.

Overall, J&J reported a profit of $4.52 billion, or $1.61 a share, up from $4.33 billion, or $1.51 a share, a year earlier. Excluding certain items, per-share earnings were $1.71 in the latest quarter.

Revenue fell 8.8% to $17.79 billion.

Analysts polled by Thomson Reuters expected per-share profit of $1.67 and revenue of $17.75 billion.

Write to Chelsey Dulaney at [e-mail]

Access Investor Kit for Johnson & Johnson

Visit http://www.companyspotlight.com/partner?cp_code=P479&isin=US4781601046

Subscribe to WSJ: http://online.wsj.com?mod=djnwires