We've watched Johnson & Johnson ($JNJ) suffer one negative headline after another. Now, we can put a number on that suffering. J&J reported fourth quarter earnings today, posting a 12 percent decline in profits and a 5.5 percent drop in sales. And it laid out its 2011 outlook, predicting results that fall short of analyst expectations.
J&J reported $1.9 billion in earnings on $15.6 billion in revenue. Significantly contributing toward that slide was J&J's pharma division, whose sales dropped 4.7 percent, Dow Jones reports. U.S. sales dropped more than international sales, with slides of 8.1 percent and 3.1 percent, respectively. The consumer drugs division, which has been plagued by recall after recall, saw global sales decline by 15 percent to $3.61 billion, while U.S. consumer drugs sustained a 29 percent sales drop to $1.22 billion.
Clearly, the spate of recalls--which continued earlier this month with a 50 million-package Tylenol, Benadryl and Rolaids event--have been a drag on sales. J&J has been trying to fix its problems; the company shuttered its troubled Fort Washington, PA, plant for a redo in April, and it has been reviewing manufacturing operations ever since. But the real test will come when all of J&J consumer drugs reappear on store shelves. Will consumers forgive and forget?
To be fair, European pricing pressures also took a bite out of J&J's latest results. So did the still-lackluster economy, which kept some joint-replacement patients off the operating table. "While we will continue to see near-term pressures on the business for 2011," CEO Bill Weldon (photo) said, "we remain committed to investing in innovative products, a robust pipeline and talented people." The company recently cut bonuses for eligible rank-and-file employees; PR staff promised that the company's woes would be "considered" when executive bonuses are awarded.