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Analyzing Johnson & Johnson’s Consumer Segment

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Consumer segment

Johnson & Johnson’s (JNJ) Consumer segment’s revenues fell by 1.8% to $3.4 billion for 2Q16—compared to 2Q15. This includes operational growth of 1.5%. It was more than offset by a negative currency impact of 3.3%.

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Over-the-counter franchise

The over-the-counter franchise contributed ~29.5% of the segment sales for 2Q16. The franchise sales improved 3.5% to $1.0 billion during 2Q16 following increased growth of analgesics and Zyrtec, allergy medication, and relaunched digestive health products in the US. It was partially offset by lower allergy product sales.

Oral care franchise

The oral care franchise contributed ~11.8% of the segment sales for 2Q16. The franchise sales improved 3.1% to $403 million during 2Q16. It included an operational growth of 6.6% partially offset by the negative impact of foreign exchange. The growth was driven by the successful launch of new products. It was also driven by successful marketing campaigns and geographical expansion of Listerine.

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Baby care franchise

The baby care franchise contributed nearly 14.6% of the segment sales during 2Q16. The franchise sales fell by 7.9% to $500 million in 2Q16. This included an operational decline of 2.1% following the consumer shift to premium products due to competition in US markets.

Skin care franchise

Skin care franchise sales improved by 6.6% to $953 million in 2Q16 following the strong performance of Aveeno and Neutrogena inside and outside US markets. The franchise also gained from the shipment timings of promotional items.

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Women’s health franchise

Women’s health franchise sales fell 11.6% to $283 million during 2Q16. This included an operational decline of 4.8%. The sales were majorly impacted by the devaluation of currency in Venezuela. However, new product launches were successful. They partially offset the declines in the franchise sales.

Wound care/others franchise

Wound care franchise sales fell by ~24.7% to $272 million during 2Q16 due to the divestiture of the Benecol brand outside US markets. It was completed in November 2014. Excluding the divestiture, the revenues for this franchise were flat during 2Q16.

For the Consumer segment, other major companies include Unilever NV (UN), Nestle S.A. (NSRGY), Kimberly-Clark Corporation (KMB), and Procter & Gamble (PG). Investors can consider ETFs like the Schwab US Dividend Equity (SCHD). SCHD holds 4.7% of its portfolio in Johnson & Johnson.

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