Yesterday, Johnson & Johnson (J&J) reported a sales rise of 8.1% for its fourth quarter (Q4) of 2020 with total sales pegged at €18.5bn ($22.5bn). Net earnings for the quarter, however, plummeted 56.7% to €1.39bn ($1.7bn). For the full year of 2020, reported sales were up 0.6% at €67.9bn ($82.5bn) and net earnings down 2.7% on the previous year at €12.1bn ($14.7bn).
Johnson & Johnson said most growth in Q4 was driven by its pharmaceutical division, up 16.3% in sales, but its consumer health division which included its oral care and skin health portfolio also grew sales by 1.4%. Total sales in the division for 2020 were also up 1.1% at €11.5bn ($14bn).
Sales strength in the consumer health division, Johnson & Johnson said, was primarily driven by increased COVID-19 demand in oral care products – a category that had grown 12% in Q4 fuelled by new flavour and product innovations from its Listerine mouthwash brand. Hair and body care brand OGx also performed well, as did medical skin care brand Dr. Ci Labo outside the US.
However, Johnson & Johnson acknowledged growth in skin health, beauty and international baby care had been negatively impacted by COVID-19 and would likely continue to be impacted in the short-term.
Tentative 2021 guidance – consumer health to see negative COVID-19 impact
As part of its full-year 2020 results, Johnson & Johnson released its 2021 guidance stating adjusted operational sales growth should sit at 8.8%. But Chris DelOrefice, vice president of investor relations at Johnson & Johnson, said this guidance had to be observed with caution.
“There’s significant uncertainty about the duration and contemplated impact of the COVID-19 pandemic. This means that results could change at any time and the contemplated impact of COVID-19 on the company’s business results and outlook is a best estimate, based on the information available as of today’s date,” DelOrefice told investors on the Johnson & Johnson earnings call.
Joe Wolk, executive vice president and CFO at Johnson & Johnson, added that the company’s consumer health division would likely “yield negative COVID-related sales” as Johnson & Johnson edged into the first quarter of 2021, though this was expected to lift in the second half of the year as consumers returned to “more typical usage patterns” in skin health and beauty.
Wolk added: “We are confident in the strength of our broad-based business and its underlying fundamentals. We are positioned to deliver meaningful value to all of our stakeholders, not just in 2021, but over the long term.”
2020 uncertainties and expectation shifts - good health is 'pivotal'
Alex Gorsky, chairman and CEO of Johnson & Johnson, said that whilst 2020 had been a year “dominated by uncertainty”, the COVID-19 pandemic had also helped clarify priorities and values.
“Because of COVID-19, we now have a deeper appreciation on just how pivotal good health is to our safety, security, and prosperity and as a society. We have a profound respect and gratitude for all the doctors, nurses and hospital staff serving on the frontlines of care, the everyday heroism of the essential workers who show up every day to keep the world’s critical infrastructure up and running, and expectations that companies can and should help drive positive change in society are higher than ever,” Gorsky told investors.
Johnson & Johnson, he said, was “built for times like this” as a large and broad-based global health care company.
So far, he said the company had been able to “weather the crisis” but also deliver on shorter term top and bottom line business goals, whilst increasing investments in innovation to “record levels”. All this, Gorsky said, was a “remarkable testament” to Johnson & Johnson’s purpose-driven culture and its core strengths that focused business on execution, innovation and people.
