Johnson & Johnson (NYSE: JNJ) has ended its two-year drought of declining sales figures. Now it just needs 76 more years of revenue growth to break its previous record.
Sales in 2011 came in 5.6% higher than the year before, which is certainly a good sign. But let's not call this an about-face turnaround. A lazy 3-point turn might be more accurate.
The growth came entirely from outside the U.S.; stateside sales declined 1.8%. And half of the growth was from changes in currency rates, which Johnson & Johnson has no control over. Backing that out, sales increased an unimpressive 2.8%.
On the bright side, the small gain means Johnson & Johnson has a smaller base that it needs to expand from, which should allow for more robust growth this year. U.S. sales of consumer products, for instance, dropped again in 2011 as Johnson & Johnson continues to recover from the recalls, but as products are reintroduced this year, sales will increase. It may take a while to get sales back to pre-recall levels, though. Wooing patients back from other over-the-counter products isn't going to be easy. Pfizer (NYSE: PFE) and Merck (NYSE: MRK), which have benefited from the outages, will fight to keep those customers.
On the prescription side, sales were hurt this year by the loss of exclusivity on antibiotic Levaquin and Concerta for attention deficit hyperactivity disorder. Generic competition began in the middle of the year, so the first half will be tough, but then year-over-year comparisons for the segment should even out.
Of the three segments, Johnson & Johnson's medical devices are most tied to the economy because many of the devices are used in elective surgery. The segment won't see substantial growth until the employment rate improves.
Johnson & Johnson will face some headwind next year because the dollar has strengthened recently, which has a negative effect on international sales. The company is guiding for 3.5% to 5.5% operational growth, which will get knocked down to just 1.5% to 2.5% if the dollar stays where it is. If it strengthens further, Johnson & Johnson might have to start its streak all over again.
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