J&J's Revenue Falls on Currency Woes

Health-care giant Johnson & Johnson reported a 2.4% drop in December quarter sales as adverse foreign exchange rates offset strong growth in U.S. pharmaceutical sales.

The company also provided a mixed forecast for 2016, projecting sales below analyst expectation but earnings excluding certain items above views.

Chief Executive Alex Gorsky said the company's core business is very healthy and that the company's recent actions will "position us well to drive sustainable long-term growth, faster than the markets we compete in."

Las week, J&J announced plans to cut about 3,000 jobs in its medical-devices division, or about 2.5% of the company's total workforce, in the company's latest step to revive the struggling business.

The business used to be J&J's largest but has stumbled amid pricing pressures, increased competition and market changes. In response, J&J has exited certain business, rejiggered how it sells devices and focused on high-growth categories like robotics and staplers.

In the fourth quarter, J&J's medical device sales fell 3.3% to $6.43 billion, representing about 36% of the company's revenue.

Overall, J&J's revenue dropped 2.4% to $17.81 billion, below the average analyst estimate of $17.88 billion on Thomson Reuters. Unfavorable currency rates shaved 6.8% off the latest quarter's total.

With about half of its sales overseas, J&J's results have been pressured lately by a strengthening U.S. dollar and weakness in some emerging markets.

J&J's pharmaceutical business, the company's largest, grew 0.8% to $8.06 billion, driven in part by a 12.7% increase in U.S. pharmaceutical sales. Strong sales of the diabetes drug Invokana, blood-cancer drug Imbruvica and blood-thinner Xarelto, offset a sharp decline in the hepatitis drug Olysio, which is facing increased competition.

Earnings in the fourth quarter rose to $3.22 billion, or $1.15 a share, from $2.52 billion, or 89 cents a share. Excluding the charge for medical devices and other items, J&J's had earnings of $1.44 in the latest fourth quarter, above the average analyst estimate of $1.42.

For 2016, J&J projected sales between $70.8 billion and $71.5 billion, below analyst expectations of $71.89 billion, and per-share earnings excluding certain items of $6.43 to $6.58, above analyst expectations of $6.38.

Shares of J&J, down 5.7% over the past year, dropped 0.2% to $96.25 in premarket trading.

Write to Chelsey Dulaney at [e-mail]

(END) Dow Jones Newswires

January 26, 2016 07:55 ET (12:55 GMT)

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