It wasn't a pretty second quarter for Johnson & Johnson (NYSE:JNJ), but the issues caused by the coronavirus pandemic were expected. In fact, the sales and earnings declines weren't as bad the healthcare conglomerate was expecting, which led management to raise its 2020 guidance.
All told, Johnson & Johnson's sales slipped 10.8% to $18.3 billion. Not surprisingly, given all the canceled surgeries, its medical devices segment was hit hardest with sales down 33.9%. Sales of consumer health products dropped 7% as people cut back on purchases of skin health and beauty care products. The pharmaceutical division was the only one with a year-over-year sales increase, although drug sales only rose by 2.1% as changes in currency exchange rates cut into their growth by 1.8 percentage points.
Second-quarter earnings came in at $1.36 per share, down 34.6% year over year. The company did a good job controlling its selling, marketing, and administrative expenses, but earnings dropped faster than revenue because Johnson & Johnson continued to spend on research and development, including incurring at-risk manufacturing costs for its coronavirus vaccine candidate.
Even as bad as the second-quarter sales and earnings look on a year-over-year basis, the results, especially for the medical devices segment, were better than management had expected when first-quarter results were revealed in April.
At this point, management thinks it can reach 2020 sales of $79.9 billion to $81.4 billion, which would be a decrease of 0.8% to 2.6% from last year. Its previous guidance forecast that sales would drop by 2% to 5.5% in 2020.
On the bottom line, management expects 2020 earnings per share in the $7.75 to $7.95 range, higher than the $7.50 to $7.90 range management predicted in April, but still 8.4% to 10.7% lower than the company's 2019 EPS.