J&J profits, sales jump

Excluding charges, earnings beat analysts' expectations; weak U.S. dollar boosts overseas sales.

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By Aaron Smith, CNNMoney.com staff writer

NEW YORK (CNNMoney.com) -- Johnson & Johnson reported robust quarterly earnings on Tuesday, lifted by strong overseas sales that benefited from the weak U.S. dollar.

The company, a producer of drugs, consumer products and medical devices, said fourth-quarter net income jumped 10 percent to $2.4 billion, or 82 cents a share.

The results included charges related to the company's $16.6 billion purchase of Pfizer's consumer healthcare division in 2006.

Excluding those charges, earnings rose 7 percent to $2.5 billion, or 88 cents a share. Analysts surveyed by Thomson First Call had projected earnings of 86 cents a share.

Sales climbed 17 percent to $16 billion, beating the consensus analyst forecast of a rise to $15.4 billion.

For 2007, Johnson & Johnson's sales jumped 15 percent to $61.1 billion, while profit fell 4 percent to $10.6 billion.

Johnson & Johnson (JNJ, Fortune 500) shares fell slightly in midday trade on the New York Stock Exchange amid a broad-based decline for stocks.

Chief executive William Weldon told analysts during a conference call that the company was well positioned to take advantage of "dynamic changes" in healthcare over the next five to 10 years as the population continues to age.

Johnson & Johnson is bolstering its pipeline, with $7.7 billion spent on R&D in 2007, an 8 percent increase from the year before, he said.

Overseas sales were a bright spot, supported by the weak U.S. dollar. In Europe, sales surged 25 percent during the quarter. In Africa and Asia-Pacific, sales climbed 20 percent. By comparison, U.S., sales rose 9 percent.

The company is finding ways to make products more attractive in international markets, said Weldon. For example, the CEO said that fruit-flavored nicotine gum was particularly popular among Asian smokers.

Les Funtleyder, analyst for Miller Tabak, called the company a "safe haven" stock with the potential to launch new products in 2009 and 2010. But Funtleyder, who has a "neutral" rating on the stock, also said that "lackluster products" were impeding near-term growth.

Johnson & Johnson said its growth was "negatively impacted" by reduced sales for Procrit, an anti-anemia treatment used in conjunction with chemotherapy.

But Weldon defended Procrit. "We think we will be able to drive [Procrit sales] and we have a strong commitment to it," he said.

Procrit, and similar drugs Epogen and Aranesp from the biotech Amgen (AMGN, Fortune 500), have been dogged by safety concerns. Last March, the FDA added a warning to the product labels because of increased risk of death in some cancer patients. FDA advisory committees met twice last year to limit the pool of patients who can use these drugs, and another regulatory panel will meet in March.

Johnson & Johnson has submitted to U.S. and European regulators potential drugs for the treatment of schizophrenia, psoriasis, muliple myeloma, HIV infection and sexual dysfunction.

Johnson & Johnson, based in New Jersey, is the largest producer of pharmaceuticals in terms of annual sales, though it also sells consumer products. New York-based Pfizer (PFE, Fortune 500) is the largest company that draws all or most of its sales from drugs. To top of page

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Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer.

Morningstar: © 2014 Morningstar, Inc. All Rights Reserved.

Factset: FactSet Research Systems Inc. 2014. All rights reserved.

Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved.

Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor’s Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2014 and/or its affiliates.