Business

Johnson & Johnson warns on 2017 profit

Slowing demand for its medical devices and stronger dollar affect fourth quarter sales

Johnson &Johnson said weakness in some areas was offset by strong demand for newer products. Photograph: Lucas Jackson/Reuters

Tue Jan 24 2017 - 16:36

Healthcare giant Johnson & Johnson forecast lower-than-predicted 2017 profit, blaming the impact of the stronger dollar. The warning came as negotiations with Swiss biotechnology company Actelion on a takeover that is potentially its largest deal drag on into weeks.

J&J, the world‘s biggest healthcare company, also said it is evaluating potential strategic options for its diabetes care business that could include a sale, partnerships or joint ventures.

The company said profit for this year will be $6.93 to $7.08 a share, excluding some items, lower than the $7.11 average of analyst estimates. Fourth-quarter earnings were $1.58 a share, topping projections of $1.56.

Chief financial officer Dominic Caruso attributed the shortfall in this year’s outlook to the impact from foreign exchanges, saying analysts may not have adjusted their numbers.

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“We attribute it solely to currency,” Caruso said in a interview with Bloomberg Television.

J&J, whose businesses include consumer brands like Johnson‘s baby care and Neutrogena as well as medical devices and pharmaceuticals, suffered from the stronger dollar as it makes almost half of its sales overseas.

J&J is the first big US drugmaker to report earnings since Donald Trump was sworn in as president Friday, after surprisingly attacking the industry this month on high drug prices and accusing pharmaceutical companies of “getting away with murder”.

J&J chief executive Alex Gorsky was among a group of top CEOs from various industries who met Monday with Mr Trump to talk about manufacturing jobs and regulations.

The meeting was “very productive”, Mr Caruso said, with discussions focused on trade, taxes and jobs in the US.

In a phone interview, Mr Caruso said the diabetes devices being explored strategically have been hit by “significant” price declines for several years in the market and it‘s difficult to fund future innovation.

Sales rose 1.7 per cent in the fourth quarter to $18.1 billion, compared with $18.3 billion predicted by analysts. Net income gained 19 per cent to $3.81 billion, or $1.38 a share, from $3.22 billion, or $1.15 a share a year earlier.

Revenue for 2017 revenue is forecast to be $74.1-$74.8 billion. Analysts had anticipated $75.1 billion. – Bloomberg

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