‘Our strategy is working’: J&J Q3 net profit soars 21.6%

This week, Johnson & Johnson (J&J) reported sales of €24.3bn ($23.79bn) for the third quarter (Q3) of 2022, up 1.9% on the previous year. Net profit in Q3 surged 21.6% to €4.5bn ($4.45bn) from €3.74bn ($3.66bn) in 2021, a stark contrast to the company’s 23.3% net profit dip in Q2, reported in July​. Adjusted net earnings, excluding intangible amortization expense and special items, sat higher at €6.9bn ($6.7bn) but was down 2.7% on the previous year.

Sales in J&J’s consumer health division – soon to be carved out into standalone business Kenvue – dipped 0.4% to €3.8bn ($3.79bn). Adjusted operational growth, however, which excluded net impact of acquisitions, divestitures and translational currency, grew 4.8%. Growth across the business unit had largely been driven strategic price increases, over-the-counter health products in the US and strong performances of Neutrogena and Aveeno skin care brands worldwide.

‘Solid results across our business segments’​

Joaquin Duato, CEO of J&J, said the results demonstrated the company’s “continued strength and resilience”​ across all three of its business units, adding that the company would maintain its 2022 full-year operational sales guidance of 7%.

Duato said J&J remained confident in international business and its ability to continue advancing its “innovative portfolio and pipeline”.​

Speaking to analysts on the company’s earnings call, Joseph Wolk, executive VP and CFO of J&J, added: “We are pleased to report solid results across our business segments in the third quarter. We accelerated operational sales growth across all three segments, and we were able to meet earnings expectations despite significant inflationary impacts to input costs. This performance reflects the strength of our business and versatility of our operations despite persistent global macroeconomic challenges.”​

Consumer health split – ‘we are making great strides towards the planned separation’​

Thibaut Mongon, executive VP and worldwide chairman of consumer health at J&J, told analysts the company was “very proud”​ of what the business unit had achieved in Q3.

“Our strategy is working. Our pricing actions were realised, supply chain constraints eased, and we are also against easier prior year comparables. Our third quarter results reflect those dynamics and really demonstrate our ability to achieve results despite the macroeconomic environment that Joe referenced and that continues to be volatile,”​ Mongon said.

Looking ahead, he said J&J was advancing well on the carve-out of its newly named consumer health business Kenvue – set to be completed mid- to late-2023. The vision for the new business, he said, was to be modern and digital-first, associated with trust, care and science.

However, growth in 2023 would not be without its challenges, he said, with innovation set to prove key.

“We expect that the world will continue to be extremely volatile, with inflationary pressure, supply chain disruption, geopolitical environment, and continued impact from the COVID-19 pandemic in certain parts of the world. So, (…) with that in mind, we are certainly prepared to navigate this environment, thanks to the quality of our brands, [and] the strengthening of our execution capabilities around the world.”​

Late last year, GlobalData analyst Alice Popple, said J&J was primed to become much more competition in personal care following the carve-out​ of its consumer health business, noting it would ensure a “more focused industry approach”.​