Johnson & Johnson on Tuesday posted better than expected third quarter earnings on strong demand for its cancer drug Darzalex, but said it may still cut some jobs as it contends with inflationary pressure and challenges created by the strong dollar.
Joseph Wolk, chief financial officer, J&J said that the US healthcare conglomerate is looking at "right-sizing" itself, particularly as it moves from being a three-segment business to a two segment business through the spinoff of its consumer unit.
That business, which will be called Kenvue and hold many of the company's best known brands like Band-Aid bandages and Tylenol, is set to be spun out late next year.
Affects Of Inflation
J&J said it was not immune to the affects of inflation on its business and the impact of a strong dollar, despite "healthcare being more resilient" than most industries. A stronger dollar will reduce 2023 adjusted earnings by between 40 cents and 45 cents, the company said.
"We are looking at making sure that our resources are deployed on those projects, those initiatives, those services that really add the most value for our business," Wolk told Reuters.
Johnson & Johnson shares were marginally down in early trading at $166.29, reversing from their premarket gains.
The share move was mainly due to macroeconomic and currency concerns which are not unique to J&J, said Edward Jones analyst John Boylan.
The company expects some inflationary pressures to ease next year, but warned higher costs of inventory manufactured in 2022 could weigh on 2023 profit.
Total sales rose 1.9% to $23.79 billion in the third quarter, topping estimates of $23.34 billion, according to Refinitiv IBES data.
Excluding items, J&J earned $2.55 per share, beating Wall Street estimates by 8 cents.
Sales of cancer drug Darzalex jumped nearly 30% to $2.05 billion in the quarter.
The medical devices unit reported a 2.1% rise in sales to $6.78 billion on demand for contact lenses and wound-closure products.