J&J profits fall but solid sales driven by personal care growth

The New Jersey-based personal care and pharmaceutical company posted Q3 sales of $15bn, a 12.7 percent increase on the same period last year. However, operating profit fell 10.7 percent to $3.3bn as a result of disappointing pharmaceutical sales related to safety concerns and cost increases. Most notably J&J endured the appearance of a $745m restructuring charge on the books, which helped push operating margins down to 21.8 percent from 27.5 percent last year. "We continue to deliver solid earnings while investing in the future growth of our business,"​ said CEO William Weldon. "Our broad base enables us to pursue opportunities while managing pressures in certain markets." ​ The consumer division, which includes most of the firm's personal care brands, delivered sales of $3.6bn, a 47.5 percent increase on last year. However, considering the impact of the acquisition of Pfizer Consumer Healthcare in both periods, sales grew at a slower rate of 3.5 percent. Within the category, beauty care sales, which would not have been affected by the Pfizer acquisition, grew strongly at 16 percent taking sales for the sector to $737m for the quarter. Sales growth in the US was particularly high in beauty care, while as a whole the company posted higher sales growth in Europe than the US. The company said the skin care lines of Aveeno, Clean & Clear and Neutrogena performed strongly. Oral care sales, which were not disclosed in 2006 before the acquisition of Pfizer and its Listerine brand, were $396m. Listerine was mentioned as a strong performer for J&J after its original mouthwash was joined on the shelves by several new whitening products. J&J's forecast for total sales growth for 2007 remains unchanged at between 11.5 and 12 percent 2007 while its earnings expectations have improved to the range of $4.10 to $4.13 a share, from the prior projection of $4.02 to $4.07