The New Jersey-based pharmaceutical and consumer goods firm Johnson & Johnson beat analyst forecasts as it reported its earnings for the first quarter of 2019. However, the company's earnings were still down 14 percent when compared to the previous year. The firm's mounting legal costs had removed a good chunk of its profits in the first quarter, with the company spending hundreds of millions of dollars to settle thousands of cases against its various products.
During its most recent earnings report, the company announced a first-quarter net income of US$3.75 billion. The figure is 14 percent down from the firm's US$4.37 billion income in the same quarter last year. Johnson & Johnson's chief financial officer, Joseph Wolk, told investors that they are continuing to manage their portfolio and investments in a disciplined manner. Wolk also stated that they will be investing in various positions to ensure the company's long-term sustainable growth.
The company's sales numbers barely moved during its first three months, slightly rising from US$20.01 billion to US$20.02 billion. However, its earnings were still way above the initial analyst forecasts, which pegged the company's first-quarter sales to be around US$19.61 billion. Half of the firm's revenue still came from its prescription drug sales, which increased from US$9.84 billion last year to US$10.24 billion this year.
The firm's first-quarter earnings beat analyst's expectations, who predicted lower figures due to the company's mounting legal expenses. In the first quarter of this year, Johnson & Johnson has already spent more than US$423 million on litigation expenses.
That figure is expected to increase in the coming months as the company continues to fight thousands of new lawsuits, which alleges that its Johnson & Johnson talc baby powder is causing cancer to its users.
Following reports that alleged that the company's baby powder had contained asbestos, Johnson & Johnson's usually stable stock prices plummeted.
The company has repeatedly denied any wrongdoing and has stood by its product claiming that it is perfectly safe to use and does not in any way cause cancer. Johnson & Johnson spokesman Ernie Knewitz previously mentioned that a lot of the cases against its baby powder product had been overturned and that talc litigation expenses only account for 10 percent of its legal costs during the first quarter last year.
During the last quarter of 2018, the company had spent a total of US$1.29 billion in legal expenses. Majority of that expense was used to settle 2,500 lawsuits over its popular blood thinner medication Xarelto. Johnson & Johnson and its European partner, Bayer, also had to split a US$775 million settlement last year.
