J&J 2022 net profit drops 14%: ‘Our approach to 2023 can be best described as prudent,’ says CEO

By Kacey Culliney

- Last updated on GMT

Johnson & Johnson remains on track to spin-off its consumer health division, featuring the Neutrogena brand among others [Getty Images]
Johnson & Johnson remains on track to spin-off its consumer health division, featuring the Neutrogena brand among others [Getty Images]

Related tags Johnson & johnson J&J financial results Personal care Skin care Neutrogena economic crisis

Personal care major Johnson & Johnson (J&J) has reported a net profit dip for the full year and last quarter of 2022 amidst ongoing macroeconomic challenges, though its CEO remains focused on heavy R&D investment.

Last week, Johnson & Johnson (J&J) reported net sales of €86.8bn (US$94.94bn) for the full year of 2022, up 1.3% on the previous year. Fourth quarter earnings, however, were down 4.4% versus last year at €21.67bn (US$23.7bn). Net profit for both the full year and Q4 were also down 14.1% and 25.7% respectively, at €16.39bn (US$17.94bn) and €3.21bn (US$3.52bn). Operational growth, which excluded net impact of acquisitions, divestitures and translational currency, was up 6.2% for 2022.

Sales in J&J’s soon-to-be spin-off consumer health division Kenvue dipped very slightly by 0.5% for the full year but were up 1% for Q4. Adjusted operational growth, however, grew 3.9% for the full year and 6.4% for Q4, with Neutrogena performing particularly well.

In early January, J&J filed for an IPO [Initial Public Offering] for the business unit, bringing the spin-off, initially announced back in November 2021​, one step closer.

‘We have proven that Johnson & Johnson is resilient’

Joaquin Duato, chairman of the board and CEO of J&J, said the full year results reflected continued “strength and stability”​ despite macroeconomic challenges.

“I am inspired by our employees who make a difference in the health and lives of people around the world every day. As we look ahead to 2023, Johnson & Johnson is well-positioned to drive near-term growth, while also investing strategically to deliver long-term value,”​ Duato said.

Speaking to analysts on the company’s earnings call, he added: “Looking ahead, well, we expect some of the headwinds that impacted 2022 to continue. We have proven that Johnson & Johnson is resilient in times of macroeconomic challenges. In this environment, our approach to 2023 can be best described as prudent, and our priorities for the year are clear and remain consistent.”

J&J, for example, was finalising plans to strengthen operations in pharmaceuticals and medtech and remained on track to complete the separation of its consumer health business Kenvue in 2023, he said. It would also continue heavy investment in R&D – a sector it had injected almost €13.69bn (US$15bn) into in 2022. “I am energised about what is to come,”​ the CEO said.

Full-year 2023 guidance ‘responsibly cautious’

Joe Wolk, executive VP and CFO at J&J, said the company was predicting full-year 2023 operational growth to sit at 4.5%-5.5%, though added this financial guidance ought to be viewed as “responsibly cautious, given the many external uncertainties”.

“We are focused on delivering competitive growth for the new Johnson & Johnson while also completing a successful consumer health separation. We are confident that our current plans position us for long-term growth and value creation for shareholders,”​ Wolk said.

Asked by an analyst what areas J&J was cautious on, he said the global macroeconomic and geopolitical uncertainties. The company was also assuming a lot of carryover from the “inflationary impact”​ of 2022, he said.

“We do think these costs will be at a higher level for some time. But as you saw with our fourth-quarter results and, really, the outlook for 2023, we’re doing everything we can responsibly to prioritise our top investments for the long-term, as well as manage costs in the interim.”

In January, this year, J&J unveiled a skin supplement innovation under its Neutrogena brand​, in partnership with UK customised nutrition firm Nourished. The ‘Nourished x Neutrogena Skin360 Skinstacks​’ had been launched exclusively in the US for the time being.

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