By Ransdell Pierson
(Reuters) - Johnson & Johnson reported lower-than-expected quarterly sales and cut its full-year 2012 profit forecast due to the stronger dollar, and its new chief executive vowed to be more disciplined in paring away slow-growing businesses.
The diversified healthcare company in April had raised its full year 2012 profit forecast by about 2 cents per share due to a weakening dollar, which raises the value of sales in overseas markets.
But J&J on Tuesday switched gears and trimmed its full-year forecast by 7 to 10 cents per share, citing a turnaround in the dollar's direction. It now expects $5.00 to $5.07 per share, little different from its earnings per share profit last year of $5.00.
A stronger dollar is especially punishing to companies like J&J that derive a big percentage of sales outside the United States.
In the face of likely flat earnings this year, J&J's new chief executive Alex Gorsky said his top goals include a continuing rebound of the company's prescription drugs business and reintroducing to U.S. drugstores scores of J&J over-the-counter medicines that have been recalled in the past three years due to quality-control lapses. They include painkillers Tylenol and Motrin.
"We're firmly focused on remediation of the over-the-counter business," he said in a two-hour conference call with industry analysts, referring to ongoing efforts to revamp a Pennsylvania factory where many of the recalled products were made.
Morningstar analyst Damien Conover said some investors have been hoping that Gorsky, a former company vice president who took the helm of J&J on April 26, will divest some significant non-pharmaceuticals businesses -- following the lead of rivals such as Bristol-Myers Squibb Co and Pfizer Inc.
But Conover said Gorsky, in the conference call, suggested he would only be trimming at the edges.
"Gorsky's strategic vision seemed very similar to Bill Weldon," Conover said, referring to the longtime former J&J CEO. "His comments suggest he will continue the diversified approach" of offering a wide array of prescription drugs, medical devices and consumer products.
Even so, Gorsky suggested he would be open to paring away some of J&J's slower-growing operations or ones that no longer fit in the company's overall business strategy.
"We will be more selective in what areas we'll be or not be in," he said during the call. "We have to be more decisive going forward."
The company earned $1.41 billion, or 50 cents per share, in the second quarter. That compared with $2.78 billion, or $1.00 per share a year ago. Quarterly sales fell 0.7 percent to $16.48 billion, shy of Wall Street expectations of $16.69 billion.
Excluding a number of big charges, J&J earned $1.30 per share in the most recent period. Analysts, on average, expected $1.29 per share, according to Thomson Reuters I/B/E/S.
J&J took charges of $2.2 billion in the most recent quarter related to the write-down of research assets of its Crucell vaccines business, increased litigation costs related to probes of how it marketed its Risperdal schizophrenia drug and costs of its recent acquisition of Swiss medical device maker Synthes.
(Reporting by Ransdell Pierson; Editing by Jeffrey Benkoe and Phil Berlowitz)
