In short
It’s time again to pick the bones out of the numerous quarterly financial results being reported. And where better to start than Johnson & Johnson which has just announced sales of $16.5 billion for the second quarter of 2012, a decrease of 0.7% as compared to the second quarter of 2011, albeit with a significant currency loss painting a gloomier picture than the top line figures suggest.
Background
Sales
Operational results, meaning real sales, increased overall 3.5% with a negative impact of currency of 4.2%. Most striking was a U.S sales decrease of 1.2%. International sales, while showing a decrease of 0.4%, actually demonstrated operational growth of 7.1%, which was offset by a negative currency impact of 7.5%.
J&J is a multi-platform business, so let’s focus on the device/diagnostics portfolio in which Worldwide sales of $6.6 billion for the second quarter represented a decrease of 0.1% versus the prior year consisting of an operational increase of 3.4% and a negative currency impact of 3.5%.
Currency impact on the international picture was significant and without it would have seen sales increases in U.S and international arenas. U.S sales increased 2.9%, while the International sales decrease of 2.4%, reflected an operational increase of 3.8% and a negative currency impact of 6.2%.
Sales included the impact of the recently completed acquisition of Synthes, Inc., which contributed 2.9%, 3.7%, and 2.3% to worldwide, U.S and international operational sales growth, respectively.
Primary contributors to operational growth were orthopaedic sales from the recently completed acquisition of Synthes; Biosense Webster’s electrophysiology products in the Cardiovascular Care business; Ethicon’s wound care products in the General Surgery business; LifeScan’s blood glucose monitoring products in the Diabetes Care business; and international sales of energy products in the Specialty Surgery business. The growth was impacted by lower sales in the Cardiovascular Care business, reflecting the well-publicised decision to exit the drug eluting stent market at the end of the second quarter of 2011.
Earnings
Net earnings and diluted earnings per share for the second quarter of 2012 were $1.4 billion and $0.50, respectively.
Second-quarter 2012 net earnings include after-tax special items of $2.2 billion, consisting of non-cash charges primarily attributed to a partial write-down of in-process research and development and intangible assets related to the Crucell vaccines business, an increase in the accrual for the potential settlement of previously disclosed civil litigation matters, and transaction and integration costs related to the acquisition of Synthes, Inc.
Second-quarter 2011 net earnings included after-tax special items of $772 million, consisting of net charges related to the restructuring by Cordis Corporation, the net impact of expenses related to litigation, DePuy ASR™ Hip recall costs, and a currency adjustment related to the acquisition of Synthes, Inc.
Excluding these special items, net earnings for the current quarter were $3.6 billion and diluted earnings per share were $1.30, representing increases of 2.7% and 1.6%, respectively, as compared to the same period in 2011.
Company comments
“Our talented associates around the world are building a strong foundation for sustainable growth through meaningful innovations and an expanding global footprint. Our pharmaceutical pipeline continued its strong momentum this quarter with the submission of several new drug applications, as well as strong growth from several recently launched products that meet critical patient needs,” said Alex Gorsky, Chief Executive Officer. “The completion of the Synthes acquisition also marks an important milestone in strengthening our leadership in key health care markets, creating a powerful portfolio of orthopaedic and neurological solutions to advance patient health and well-being,” said Gorsky.
This item represents highlights from J&J’s quarterly financials. The full release can be found here.
Source: Johnson & Johnson, PR Newswire
