J&J tops 4Q earnings forecasts as profit, revenue slip

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Category: Business

Listening

Unlocking Word Meanings

Read the following words/expressions found in today’s article.

  1. decline / dɪˈklaɪn / (v.) – to become lower in amount, number, etc.
    Example:

    Prices often go up when the economy declines.


  2. convert / kənˈvɜrt / (v.) – to change from one form, such as a currency or measurement, to another
    Example:

    Please convert the weight of the products into kilograms.


  3. exchange rate / ɪksˈtʃeɪndʒ reɪt / (n.) – the value of money in one country when changed into the money of another country
    Example:

    The US dollar to Japanese yen exchange rate increased today.


  4. split off (something) / splɪt ɔf / (phrasal v.) – for a part of an organization to separate from the organization and become independent
    Example:

    The tech giant announced that it will split off its business into three units.


  5. wind down (something) / waɪnd daʊn / (phrasal v.) – to gradually lessen the amount of work in a business or organization until it ends completely
    Example:

    In February, the company will wind down the production of winter clothes.


Article

Read the text below.

Johnson & Johnson beat earnings expectations in the final quarter of 2022 even as a strong dollar and sinking COVID-19 vaccine sales hurt revenue.


The healthcare giant also debuted a better-than-expected 2023 earnings forecast.


J&J said fourth-quarter earnings slipped 26% to $3.52 billion and revenue declined 4.4% to $23.71 billion.


Sales were hurt last year by the strong U.S. dollar, which is currently worth more than a euro. That can affect companies with a lot of international business because they have to convert those sales into dollars when they report earnings.


J&J brings in nearly half of its revenue from outside the United States. The company’s international sales fell more than 11% in the quarter, but that decline was only 1% when not counting exchange rates.


J&J also recorded no U.S. sales in the quarter from its one-shot COVID-19 vaccine, which brought in $689 million in revenue from international markets. U.S. regulators have strictly limited who can receive J&J’s shot due to a small risk of rare but serious blood clots.


Johnson & Johnson sells prescription drugs and medical devices. It is splitting off its consumer health business, which includes well-known products like BandAids.


Chairman and CEO Joaquin Duato said that separation should be completed this year.


Revenue from pharmaceuticals, the company’s largest business, fell 7% to $13.16 billion in the fourth quarter even as worldwide sales of the cancer treatment Darzalex soared nearly 27% to more than $2 billion.


Medical device revenue slipped 1% to about $6.8 billion.


J&J also brought in $3.8 billion in sales from consumer health.


The company booked costs in the quarter from winding down COVID-19 vaccine production, splitting off consumer health, and completing its acquisition of cardiovascular technology company Abiomed, a deal it announced in November.


Overall, adjusted earnings totaled $2.35 per share in the fourth quarter.


Analysts expected earnings of $2.23 per share on $23.9 billion in revenue, according to FactSet.


This article was provided by The Associated Press.


Viewpoint Discussion

Enjoy a discussion with your tutor.

Discussion A

  • Nearly half of J&J’s revenue comes from outside the United States. What do you think J&J should do to generate more sales in the U.S. (ex. improve its products, create new products)? Discuss.
  • In your country, how popular are J&J products (ex. prescription drugs, health and beauty products)? Do you buy any of the company’s products? Why or why not? Discuss.

Discussion B

  • In the 4th quarter,  J&J recorded no US sales from its one-shot COVID-19 vaccine but generated $689 million in revenue from international markets. If you were one of J&J’s directors, would you decide to continue the production and sale of COVID-19 vaccines? Why or why not? Discuss.
  • US regulators have strictly limited who can receive J&J’s shot due to a small risk of rare but serious blood clots. If this vaccine was allowed in your country, would you have agreed to get vaccinated with it? Why or why not? Discuss.