Health care giant Johnson & Johnson said Tuesday its sales rebounded but its profit dropped 23 percent in the first quarter because of higher costs for recalls and litigation and a tax gain that boosted last year's results.
Adjusted earnings topped analysts' expectations. J&J also raised its full-year earnings outlook, sending the company's stock up $1.34, or 2.2 percent, to $61.80 in premarket trading.
The maker of Band-Aids, baby shampoo and birth-control pills posted net income of $3.48 billion, or $1.25 per share, down from $4.53 billion, or $1.62 per share, in 2010's first quarter.
But after an unprecedented two years of declining sales, revenue rose in the quarter by 3.5 percent, to $16.17 billion from $15.63 billion.
Adjusted income was $4.86 billion, or $1.35 per share. Analysts polled by FactSet, on average, expected earnings per share of $1.03 and revenue of $15.6 billion.
Johnson & Johnson, based in New Brunswick, N.J., raised its profit forecast for the year to $4.90 to $5 per share, from $4.80 to $4.90 per share. Those figures exclude any one-time charges or gains. Analysts previously expected $4.84 per share.
Overseas revenue jumped 7.3 percent, to $8.57 billion, offsetting a 0.6 percent decline in U.S. revenue to $7.61 billion. Domestic sales have been hurt by an embarassing string of 22 recalls of products including Tylenol and Benedryl over the last 19 months and the year-long closure of a consumer health products factory where many of the recalled medicines were made.
Consumer product sales decreased 2.2 percent to $3.68 billion as a 5.9 percent rise in overseas sales was wiped out by a 13.8 percent plunge in the U.S., mainly due to the recalls.
Drug revenue rose 7.5 percent worldwide, to $6.1 billion, and sales of medical devices and diagnostic products edged up 3.3 percent, to $6.43 billion.
"Our pharmaceuticals business demonstrated strong growth this quarter led by the performance of newly launched products," CEO William Weldon said in a statement. "We delivered solid earnings while making investments necessary to advance the robust pipelines across our business."
J&J took after-tax charges totalling $271 million for litigation and costs of additional recalls of DePuy artificial hips.
It also reported higher costs for production, sales and administration, and research and development. A year earlier, the quarter's results were buoyed by a $910 million after-tax gain related to litigation.
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