Johnson & Johnson has posted a strong set of results for the fourth quarter, which beat analysts’ expectations as net income hit $2 billion dollars, or $0.67 per share, excluding one-time items, an increase of almost 18% over the same period in 2003 [[21/01/04a]].
Recorded profit was down 34% to $1.2 billion or $0.41 per share, which was principally due to a tax bill of nearly $800 million, thus taking advantage of a tax break introduced recently in the USA that allows companies to advantageously bring back overseas profits – in J&J’s case, some $11 billion.
Revenues rose 13% to $12.8 billion, with pharmaceutical sales climbing 14% to over $5.8 billion. The latter was boosted by a 31% increase in turnover for its rheumatoid arthritis, ankylosing spondylitis and Crohn’s disease treatment, Remicade (infliximab), to $598 million, and a 29% jump for the antipsychotic Risperdal to $846 million. A 29% rise was also recorded for J&J’s epilepsy drug, Topamax (topiramate), to $381 million. A more worrying trend was the continuing decline of Procrit (epoetin alfa), used to treat anaemia in cancer patients. Sales declined 12% to $850 million, due to increased competition, notably from Amgen’s Aranesp (darbepoetin alfa).
Nevertheless, the group’s results, which showed overall strong performances from pharmaceuticals, medical devices and diagnostics, and consumer products, were welcomed by investors and J&J’s shares closed up almost 4% on the New York Stock Exchange at $63.72, and continued to rise during after-hours trading. A research note from Morgan Stanley claimed that “the numbers were quite impressive across the board and earnings quality was high,” and J&J is confident of good growth yet again in 2005.
However, its proposed acquisition of devices company Guidant for $24 billion [[16/12/04a]], led the company to forecast earnings growth this year of around 5% to 7% – around half of the 2004 figure, with a return to a double-digit increase in 2006.