J&J Worldwide Skin Care Crosses $1.5 Bil. Mark In 2000
This article was originally published in The Rose Sheet
Executive Summary
Johnson & Johnson's flourishing skin care business, which saw double-digit increases in the U.S. for both the 2000 fourth quarter and full year, remains the brightest performer in the firm's consumer sector.
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Johnson & Johnson's flourishing skin care business, which saw double-digit increases in the U.S. for both the 2000 fourth quarter and full year, remains the brightest performer in the firm's consumer sector. The company's U.S. skin care franchise, which includes the Neutrogena business as well as the Aveeno, Clean & Clear and RoC lines, achieved sales of $739 mil. in 2000, up 12.8%, and $174 mil. in the fourth quarter, up 16% over the previous-year period. International skin care revenues were not as stellar, with a 1% increase to $767 mil. for the year and a 2.7% drop to $182 mil. in the quarter. Overall, J&J's worldwide skin care sales grew 6.4% to $1.5 bil. in 2000 and 5.6% to $356 mil. in the fourth period. Excluding a negative currency impact, operational sales in the skin care segment increased 11% in the quarter, J&J VP-Investor Relations Helen Smart told analysts during a conference call Jan. 23. Neutrogena, which saw "almost 20% growth in the fourth quarter," continues to be the driving force behind the skin care business' success, Smart noted. Under the leadership of CEO Michael McNamara, who took the helm at Neutrogena in November 1999, the company uses line extensions as a means of achieving consistent double-digit growth (1 (Also see "Neutrogena Growth Rests In Existing Categories - CEO McNamara" - HBW Insight, 9 Oct, 2000.)). Brand extensions launched last year included Therapeutic T/Gel Intensive Anti-Flake Treatment, Skinclearing Moisturizer, On-the-Spot Acne Patch, Pore Refining Mattifier and Mask, Soothing Relief anti-itch medicated moisturizer and Deep Clean Astringent. The J&J subsidiary also is expected to expand Neutrogena Clean shampoos and conditioners with 60 Second Hair Care early this year and announced plans to launch a line of corrective cosmetics in July (2 (Also see "Neutrogena" - HBW Insight, 3 Jul, 2000.)). Aveeno and Clean & Clear also showed "solid growth" in the fourth quarter, although the RoC line, which J&J introduced to the U.S. in late 1999, "experienced a decline in sales when compared to the same period a year ago due to launch-related inventory stocking," Smart reported. Baby skin care items also fared well, helping boost sales within J&J's baby and kids care sector, particularly in the U.S., where revenue for baby/kids care jumped 10.7% to $321 mil. in 2000. Worldwide, the segment realized a small 1.3% gain to $1.23 bil., impacted by a 1.6% drop in international sales to $913 mil. "Over the past five years, we have focused intensely on building our skin care business and it is growing nicely," J&J Chairman and CEO Ralph Larsen noted. On the whole, the other segments within J&J's consumer business did not fare as well. For example, McNeil Consumer Healthcare, which markets OTC brands such as Tylenol and Motrin, achieved a 1.5% increase in worldwide revenue to $1.76 bil. for the year. International sales carried the division, rising 14.7% to $273 mil., while McNeil's U.S. sales were nearly flat at $1.49 bil. J&J's women's health business fell both domestically and internationally in 2000. U.S. sales were $539 mil., down 1.1%, while international revenue dropped 7.8% to $806 mil. Overall, J&J consumer sales in the U.S. increased a modest 2.5% to $3.76 bil. in 2000, helping fuel a slight .6% rise in worldwide sales to $6.9 bil. International sales fell 1.6% to $3.14 bil. In the fourth quarter, domestic consumer sales rose 3% to $976 mil., while international revenue decreased 6.2% to $747 mil. Combined, J&J's worldwide consumer business fell 1.2% to $1.72 bil. in the period. Consolidated sales for the year totaled $29.14 bil., a 6.1% jump over 1999 sales of $27.47 bil. Disregarding the effect of negative currency, global revenues increased 9.4%, J&J reported. Fourth quarter worldwide sales increased 3.4% to $7.11 bil. Earnings for the year totaled $4.8 bil., a 15.2% increase over 1999. For the quarter, earnings jumped 18.2% to $891 mil. Addressing J&J's overall growth strategy, Larsen acknowledged that acquisitions - at least those likely to result in "profitable growth" - remain an important part of the company's future. Larsen cited Neutrogena as one of the firm's successful purchases in recent years. J&J has been mentioned as one of several possible suitors for Bristol-Myers Squibb's Clairol hair care division, along with Procter & Gamble, Unilever and Henkel. BMS announced its interest in divesting both Clairol and its Zimmer orthopedic medical device business in late September (3 (Also see "Clairol/Pharma Business Exchange Sought By Bristol-Myers" - HBW Insight, 2 Oct, 2000.)). Although Clairol remains the "number one hair products company in the U.S.," domestic sales fell 4% in 2000, Bristol reported Jan. 24. International revenue dropped 9%, or 8% excluding currency exchange. Worldwide, Clairol sales declined 6% to $1.89 bil. Bristol expects the brand's downward trend to reverse soon. "We believe [Clairol's] year-over-year business performance has bottomed out and we look for improved results overall beginning this quarter," BMS CFO Michael Mee told analysts in a same-day conference call. Addressing the progress of divestiture discussions, Mee said the firm remains "on plan" with the six- to 12-month timeframe initially predicted, meaning further developments could be seen by early April. "Key decisions and determinations on both Zimmer and Clairol will likely be made earlier than the guidance we gave you previously and certainly no later," he noted, adding BMS "continue[s] to look very hard at all of our options." Responding to a question regarding the estimated price tags for Clairol and Zimmer, Mee said it is "really too soon to start speculating on proceeds because what we're doing in both cases...is divesting the business, which may or may not mean selling the business. So, if we were to swap or to spin [off] or to do something else as opposed to a sale, there wouldn't be any sale proceeds," he noted. Bristol's consolidated sales for 2000 increased 5% to $21.33 bil. Fourth quarter revenue advanced 2% to $4.78 bil. Excluding businesses sold during the year - namely the Matrix Essentials salon hair care brand and three pharmaceutical products - and foreign exchange, Bristol's total sales jumped 10% for the year and 8% in the quarter. L'Oreal bought Matrix Essentials for $342 mil. in April (4 (Also see "Matrix Buy Doubles L'Oreal U.S. Professional Hair Care Business To $500 Mil." - HBW Insight, 24 Apr, 2000.)). Earnings saw double-digit increases in both periods, rising 13% to $4.71 bil. for the year and 11% to $1.16 bil. in the final quarter. |