J&J posts big rise in profits despite sales slump

By Simon Pitman

- Last updated on GMT

Related tags Personal care products Generally accepted accounting principles

Health and personal care giant Johnson & Johnson has announced a 14 percent rise in profits despite the big drop in retail sales in the US.

The company said that during its fourth quarter net profits came in at $2.71bn, compared with $2.37bn in the same period last year, thanks in part to a $229m gain from a litigation settlement.

Sales during the quarter, which ended 31 December 2008, were down 4.9 percent, from $15.96bn in the same period in 2007, to $15.18bn.

For the full year 2008, net profit was $12.9bn, a rise of 6.8 percent on the previous year, whereas net sales for 2008 were $63.7bn, increasing 4.3 percent over 2007.

Consumer sales save the day

Of the company’s three main operations, which are divided into medical devices, pharmaceutical and consumers sales, it was the latter that held out the best.

Consumer sales, which also includes the company’s wide range of personal care products, rose by 1.2 percent during the fourth quarter, to $3.85bn, whereas sales for the division in the full fiscal year 2008 rose by 10.8 percent.

Although the figures for the consumer division show a marked slow down towards the end of the year, they also illustrate how this segment has remained more buoyant, as sales for the pharmaceutical division fell by 1.2 percent in 2008 and sales of medical devices rose by just 4.3 percent.

Skin care surges ahead in the US

Skin care brands were earmarked as performing particularly well in the US market, with the company singling out Neutrogena, Aveeno and Clean and Clear, while its baby care products and Listerine mouthwash witnessed particularly strong international sales.

The company also said that sales of its newly acquired Dabao skin care line had contributed well to sales growth in the China market and are also expected to make further gains in the future.

Looking to the financial year ahead, the pronounced dip in the company’s performance towards the end of 2008 is expected to continue into 2009, as it faces increasingly challenging retail and economic conditions.

However, the company says that some of this impact should be absorbed by the acquisition of cosmetics and breast implant maker Mentor.

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