Last week, Johnson & Johnson (J&J) reported sales of €23.7bn ($24bn) for Q2 2022, up 3% on the previous year, along with first half (H1) sales of €46.6bn ($47.4bn), up 4%. Net earnings or profit across the group, however, declined by 23.3% to €4.75bn ($4.8bn) in Q2. Adjusted net earnings for the quarter, excluding after-tax intangible asset amortization expense and special items, sat at €6.79bn ($6.9bn), up 4.3%.
Sales in J&J’s consumer health division – containing its oral care and skin health portfolio, soon to be carved out into a standalone business – were down 1.3% for Q2 at €3.74bn ($3.8bn) and down 1.4% for H1 at €7.27bn ($7.39bn). Jessica Moore, VP of investor relations at Johnson & Johnson, said results in this division had been “negatively impacted by regional COVID-19 mobility restrictions”, particularly the skin health and beauty franchise.
Beauty and skin care facing macro headwinds
Joseph Wolk, executive VP and CFO at Johnson & Johnson, told analysts the company’s beauty and skin health portfolios were also particularly exposed to industry-wide “macro headwinds” such as supply constraints and inflationary pressures around input costs. Though Wolk noted the former had already started to ease in Q2.
Responding to an analyst’s question, he said J&J’s skin health and beauty divisions were primed to be “much stronger” in the second half (H2) of 2022.
“We know that point-of-sale demand continues to be strong for products like Aveeno and Neutrogena, and we just didn’t have enough on the shelf in the first half. We do anticipate that we’ll have more availability on the shelf in the second half of this year,” he said.
The company would also continue to invest in its product portfolio in spite of these headwinds, he said.
“We've raised the bar on our selectivity of where we invest, but we're very proud of the fact that we were able to increase what we believe our future depends upon, and that's innovation, by a 9% increase in R&D.”
Consumer health split – ‘greater strategic and financial success’
Joaquin Duato, CEO and director at Johnson & Johnson, said the separation of its consumer health business by 2023 would also contribute to important future growth – sentiment supported by industry analysts.
“The two new global entities will be well-positioned to thrive in their respective markets and drive greater strategic and financial success,” Duato told analysts on the company’s earnings call.
