‘Impact of COVID-19’: Johnson & Johnson Q2 net earnings plummet 35%

By Kacey Culliney

- Last updated on GMT

Global sales across Johnson & Johnson's skin, health and beauty franchise also declined 14.3% for the quarter (Getty Images)
Global sales across Johnson & Johnson's skin, health and beauty franchise also declined 14.3% for the quarter (Getty Images)

Related tags Johnson & johnson financial results COVID-19 coronavirus Skin health Beauty Personal care

Personal care major Johnson & Johnson has reported a sharp drop in net earnings across its global business for the second quarter of 2020 and a dip in sales across consumer health due to COVID-19.

The Q2 results come despite a strong income surge reported in the first quarter (Q1) of the year where the company tallied up a net income rise of 54% and a sales rise of 9.2% across its consumer health division, featuring Neutrogena, Aveeno, Johnson’s and Listerine. At the time, Johnson & Johnson CEO Alex Gorsky said the company was “built for times like this”, ​though it had lowered its 2020 full-year guidance in anticipation for a later impact.

And this week, Johnson & Johnson reported a global drop of 10.8% in sales as it pulled in €16bn ($18.3bn) for the second quarter (Q2) of 2020. Total net income for the quarter plunged 34.6% at €3.17bn ($3.62bn).

The company’s consumer health division generated €2.88bn ($3.29bn) in sales for Q2, down 7% overall, though sales in the US were up 1.3%.

“Our second quarter results reflect the impact of COVID-19,”​ Gorsky said.

The ‘impact of COVID-19’ – skin, health and beauty hit hardest

Johnson & Johnson noted that skin health and beauty care had been particularly hard hit within its consumer health division, followed by women’s health care and international baby care.

Speaking to investors in the company’s Q2 earnings call yesterday, Chris DelOrefice, vice president of investor relations at Johnson & Johnson, said the skin, health and beauty franchise had declined 14.3% globally and was the area “most negatively impacted by COVID-19 due to changes in consumers’ skin health and beauty routines”.

This was even more pronounced in the US, where skin, health and beauty declined 19.2% due to reduced consumption of sun care, cosmetics and facial care products, DelOrefice said.

By contrast, he said Johnson & Johnson’s oral care business had been “positively impacted”​ by the pandemic. “Excluding the negative impact of COVID-19, our consumer health segment delivered solid performance, with continued strong performance in our US over-the-counter and oral care business.”

Johnson & Johnson issued future guidance across its business that included the estimated impact of COVID-19, suggesting sales in July 2020 would be steady – somewhere between being down 0.8% and up 1%.

A mixed bag across beauty and personal care

All the beauty and personal care majors have, so far, reported a mixed bag of financial impact during the ongoing coronavirus (COVID-19) crisis.

Johnson & Johnson, alongside Colgate-Palmolive, had been one of the brands riding the storm in Q1, with strong results pinned up by skin health, oral care and women’s health at the time.

In Q1, Unilever results were flat, and Procter & Gamble reported a mixed impact, with its beauty business suffering. L’Oreal, Shiseido and Amore Pacific all hit financial difficulties in Q1, with sales dragged down amid COVID-19.

Almost all of the majors have retracted full-year guidance, given the uncertainties created by the ongoing COVID-19 crisis.

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