JNJ Johnson and Johnson

By Peter Loftus and Allison Prang 

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (July 18, 2018).

Strong sales of Johnson & Johnson's cancer drugs and other medicines helped boost the company's revenue and earnings for the latest quarter, but the health-products giant's U.S. consumer business continued to struggle.

Sales in the pharmaceuticals unit rose 19.9% globally, the largest increase among J&J segments. Cancer-drug sales rose 42.2%, helped by big gains for the Zytiga prostate-cancer drug and Darzalex, a blood-cancer treatment.

J&J's pharmaceutical sales topped analysts' expectations despite what executives said was a continued decline in average net U.S. pricing after discounts and rebates. Chief Financial Officer Joe Wolk said on a conference call with analysts that average U.S. net pricing could decline 4% to 6% this year, after a 4.6% drop last year.

J&J shares surged 4% to $128.65 in midday trading after the earnings report, though the stock is still down 7.9% year to date on investors' concerns about slower growth in other parts of J&J's diversified business, including consumer products.

Global sales in J&J's consumer unit inched up 0.7% to $3.5 billion. U.S. consumer sales fell 0.7%.

Within the consumer unit, the baby-care division, which sells well-known brands such as Johnson's baby shampoo, saw global sales drop 7.7% for the quarter. J&J is in the process of introducing new versions of its baby-care products, and inventory moves hurt sales for the quarter.

J&J Chief Executive Alex Gorsky called the consumer-segment results disappointing. "We need to perform better here," he told analysts on a conference call.

J&J's medical-device sales rose 3.7% to $6.97 billion for the quarter. Sales of surgery and vision products increased, while orthopedics dropped.

Overall, J&J said its sales rose 11% from a year earlier to $20.83 billion for the second quarter.

The New Jersey-based company said it now expects sales to be between $80.5 billion and $81.3 billion for the year, compared with its prior estimates of between $81 billion and $81.8 billion. J&J said Tuesday that its sales will receive a smaller-than-expected benefit from currency fluctuations.

J&J's profit rose 3.3% to $3.95 billion, or $1.45 a share.

The company narrowed its full-year profit target to between $8.07 a share and $8.17 a share on an adjusted basis, compared with its previous estimates of between $8 a share and $8.20 a share.

J&J also reported $57 million in restructuring costs in the second quarter, up from $11 million a year earlier.

By 2022, J&J aims to cut between $600 million and $800 million in supply-chain costs a year, which the company expects will result in as much $2.3 billion in charges over the next few years.

A jury in St. Louis last week awarded $4.69 billion to women and their families who alleged that the firm's talcum powder caused ovarian cancer, the biggest award so far in powder litigation that involves more than 6,000 cases. The company plans to appeal last week's verdict.

Mr. Gorsky defended the baby powder on Tuesday, saying, "We remain confident that our products do not contain asbestos and do not cause ovarian cancer."

The company announced about a month ago that it accepted a roughly $2.1 billion offer to sell its blood-glucose monitoring equipment business, LifeScan, to private-equity firm Platinum Equity.

J&J also recently got an offer from Fortive Corp. to buy Advanced Sterilization Products for $2.7 billion. J&J said at the time it had four months to decide to take the industrial-equipment maker up on its offer.

Write to Peter Loftus at peter.loftus@wsj.com and Allison Prang at allison.prang@wsj.com

(END) Dow Jones Newswires

July 18, 2018 02:47 ET (06:47 GMT)

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