Johnson & Johnson’s Consumer Segment’s 1Q17 Earnings
The Consumer segment
Johnson & Johnson’s (JNJ) Consumer segment’s revenue rose 1.0% year-over-year to $3.2 billion in 1Q17. This rise included an operational rise of 0.8% and the positive impact of foreign exchange.
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Baby care franchise
The baby care franchise reported revenue of $455 million in 1Q17, a 5.8% fall compared to 1Q16. This fall included an operational fall of 6.3% due to competition in international markets and consumers’ shift toward premium products due to rising competition in the United States.
In international markets, growth was driven by JNJ’s Hipoglos acquisition, and it was offset by competition in other products.
The segment’s beauty franchise, formerly referred to as its skincare franchise, saw its sales rise 11.6% to $981 million in 1Q17 following its acquisition of Vogue International, Light Mask, and NeoStrata in the United States.
The addition of these brands added ~21% to the franchise’s revenue, but the bump was offset by lower sales of Neutrogena in US markets and lower overall sales in Asia and the EMEA (Europe, the Middle East, and Africa) region.
Oral care franchise
The oral care franchise reported revenue of $362 million in 1Q17, a 6% fall compared to 1Q16. This fall included an operational fall of 6.2%. The franchise’s overall sales in US and international markets were weak in 1Q17.
The over-the-counter franchise reported revenue of $1.0 billion in 1Q17, a 1.4% rise compared to 1Q16. This included an operational rise of 1.5%, driven by the strong performance of Tylenol in US markets and upper respiratory products in international markets.
The rise was partially offset by the sales of Rhinocort and Zyrtec and JNJ’s divestiture of BeTotal.
Women’s health franchise
The women’s health franchise saw its sales fall 3.6% to $242 million in 1Q17, including an operational fall of 5.3%. The franchise’s sales were majorly impacted by JNJ’s divestiture of the Tucks brand to Blistex in July 2016.
Wound care and other franchises
The wound care franchise’s sales fell 11.6% to $175 million in 1Q17 due to JNJ’s divestiture of the Splenda brand and competition from other products.
Other major companies in the consumer sector include Unilever (UN), Nestlé (NSRGY), Kimberly-Clark (KMB), and Procter & Gamble (PG). To divest risk, investors can consider ETFs such as the SPDR S&P Pharmaceuticals ETF (XPH), which holds 4.6% of its portfolio in Johnson & Johnson.