TRENTON, N.J. — Health care products maker Johnson & Johnson said Tuesday its first-quarter profit dipped only slightly, beating Wall Street expectations, despite sales falling worldwide.
The world's most broadly based health care company said the recession cut into consumer products sales but that the biggest drag on revenue was the stronger dollar, which pulled down overall revenue by 6 percent.
The maker of baby shampoo, contraceptives and biotech drugs _ a Dow component that is seen as a bellwether for the overall economy _ posted net income of $3.5 billion, or $1.26 per share. That's down from $3.6 billion in 2008's first quarter. Earnings per share also amounted to $1.26, due to a $10 billion share buyback program begun in 2007.
But J&J only spent $500 million on buybacks in the first quarter, for a total of $8.6 billion so far, and said it may not complete the program early this year as originally planned.
Analysts polled by Thomson Financial expected, on average, earnings per share of $1.22 and revenue of $15.47 billion.
Revenue fell just over 7 percent, to $15 billion, as sales of consumer health products, prescription drugs and medical devices all fell.
Analyst Catherine Arnold of Credit Suisse said revenue was mainly below expectations because consumer product sales were $408 million below what she forecast. She said the prescription drug business held its own, "partly due to aggressive price increases that are not sustainable," but the overall performance is encouraging for the drugmakers reporting results in the next couple weeks.
Meanwhile, analyst Steve Brozak of WBB Securities said J&J beat analysts' forecasts because it kept expectations relatively low.
"They are the health care bellwether, and the bellwether is showing that we are nowhere near (having) the end in sight in this recession," he said, adding that competitors at best can hope to match J&J's results because even health care companies "can't defy the recession gravity."
Still, the New Brunswick, N.J.-based company confirmed its previous forecast for a 2009 profit ranging from $4.45 to $4.55 per share, excluding one-time items.
Shares of Johnson & Johnson rose 22 cents to $51.40.
"The underlying business is growing at approximately 4 percent," Chief Financial Officer Dominic Caruso said in an interview.
Caruso told analysts during a conference call that he expects total sales for the year to be $60 billion to $61 billion, just below his January forecast, but well below 2008 revenue of $63.8 billion.
Caruso noted four prescription drugs, which analysts expect each to have annual sales of more than $1 billion, could get approved for U.S. sales between April and August.
The first-quarter profit fell even though J&J cut costs by roughly 10 percent across marketing and administration, research and production. Chief Executive Bill Weldon said in a statement that J&J is still investing in new products, "positioning us well for long-term growth."
Sales declined across all three company business units. Consumer sales fell nearly 9 percent, to $3.7 billion, as significant drops in baby care, women's health and over-the-counter products were only partly offset by strong sales in skin care. New Listerine products limited the sales drop for oral care items.
Prescription drug sales fell 10 percent to $5.8 billion. The company cited generic competition to three products that together pulled down pharmaceutical sales by 10 percentage points: its blockbuster antipsychotic drug, Risperdal; Razadyne for Alzheimer's disease-related dementia, and Topamax for epilepsy and migraines. Excluding that impact, pharmaceutical sales would have been flat, and up 5 percent excluding the negative effects of a stronger dollar, the company said.
J&J also cited lower sales of Procrit, which like other anemia drugs has been hurt by safety warnings and restrictions on sales through Medicare.
The medical devices and diagnostics business had the best performance, with sales down only 3 percent at $5.5 billion. Revenue was boosted by recent acquisitions including breast implant and cosmetic product maker Mentor Corp., and strong sales of hip and spine replacement parts and a new gastric band for weight loss surgery. But sales of its Cypher artery-opening stents were down sharply because of two new competitors.
Brozak said J&J management, known for making "the right move at the right time," now needs to make a major acquisition or a lot of smaller ones.