uploads/2016/10/Chart-05-2-1.jpg

A Look at Johnson & Johnson’s Consumer Segment in 3Q16

By

Updated

The Consumer segment

Johnson & Johnson’s (JNJ) Consumer segment’s revenue fell 1.6% to $3.3 billion between 3Q15 and 3Q16. This fall is due to an operational growth of 0.1%, which was more than offset by a negative currency impact of 1.7%. The currency devaluation in Venezuela impacted worldwide growth by ~1.1% during 3Q16.

Article continues below advertisement

Baby care franchise

The baby care franchise contributed ~14.3% of the Consumer segment’s total sales in 3Q16. The franchise’s sales fell 7.9% to $466 million in 3Q16, with an operational decline of 5.6%. This decline was a result of the shift to premium products due to competition in US markets, and competition in international markets.

Oral care franchise

The oral care franchise contributed ~11.7% of the Consumer segment’s sales in 3Q16. The franchise’s sales rose 1.3% to $383 million during 3Q16, with an operational growth of 2.3% partially offset by the negative impact of foreign exchange. The growth was driven by the uptake of new products, successful marketing campaigns, and the geographical expansion of the Listerine brand.

Article continues below advertisement

Over-the-counter franchise

The over-the-counter franchise contributed ~29.6% of the Consumer segment’s sales in 3Q16. The franchise’s sales rose 0.1% to $964 million during 3Q16, thanks to the relaunch of digestive health products in the United States and growth of analgesics and Zyrtec. The higher sales were partially offset by lower sales of allergy products.

Skincare franchise

The skincare franchise’s sales improved by 10.7% to $955 million in 3Q16, with strong performance by Aveeno and Neutrogena in both US and international markets. The company acquired beauty products from Vogue International and NeoStrata in the United States.

Article continues below advertisement

Women’s health franchise

The women’s health franchise’s sales fell 13.2% to $269 million during 3Q16, with an operational decline of 9.9%. The sales were severely impacted by the Venezuelan currency devaluation. The company sold its TUCKS brand to Blistex in July 2016.

Wound care franchise

The wound care franchise’s sales fell ~24.7% to $272 million during 3Q16 due to the divestiture of the Benecol brand in November 2014. Excluding the divestiture, the revenue for this franchise was flat in 3Q16.

Other major companies in the consumer space include Unilever (UN), Nestlé (NSRGY), Kimberly-Clark (KMB), and Procter & Gamble (PG). Investors could consider the Fidelity MSCI Healthcare Index ETF (FHLC), which has a 10.1% exposure to JNJ.

Advertisement

More From Market Realist