Johnson & Johnson has increased its quarterly dividend even as the US drug and consumer products group cut its guidance for 2020 because of the impact of the coronavirus pandemic.
The New Jersey-based company on Tuesday said it expected sales for the year of between $77.5bn and $80.5bn, down from a previous estimate of $85.4bn to $86.2bn.
It predicted adjusted earnings per share for the year would be in the $7.50 to $7.90 range, down from a previous estimate of $8.95 to $9.10.
The cut in guidance, which is inclusive of the related investments the company is making to combat the virus, comes as the disease wreaks havoc on companies in all sectors and corners of the world. The virus has so far infected nearly 2m people and killed more than 120,000, according to Johns Hopkins data.
However, J&J lifted its quarterly dividend by 6.3 per cent to $1.01 a share — or $4.04 for the year after a strong first quarter.
Shares were boosted in early New York trading by almost 4 per cent to $145.42 on the news, exceeding the rise in the S&P 500.
For the three months to March 31, the company reported adjusted earnings per share of $2.17, beating expectations, and sales of $20.69bn, up from $20.02bn the previous year. The company’s New York-listed shares gained 3.3 per cent during pre-market trading.
J&J said its consumer health division benefited from increased demand driven by the coronavirus pandemic, with sales rising 11 per cent in the quarter to $3.6bn.
Strong sales of over-the-counter painkillers Tylenol and Motrin, upper respiratory product Zyrtec and mouthwash Listerine helped buoy results.
Medical devices, however, declined 4.8 per cent to $5.9bn as elective and non-essential procedures relating to surgery, orthopaedics and other fields were pushed back to free up healthcare service capacity to deal with the virus.
Alex Gorsky, chief executive, said the company was “built for times like this”, adding: “We are leveraging our scientific expertise, operational scale and financial strength in the effort to advance the work on our lead Covid-19 vaccine candidate.”
J&J is developing a vaccine for the Covid-19 that will be available on a not-for-profit basis.
If early trials deliver good results, the vaccine could be ready by early 2021.
It would be approved under an emergency use authorisation, a fast-track approval from the US Food and Drug Administration. The company has stressed its ability to manufacture at scale — something that would make it more widely available if shown to work. It hopes to produce 1bn doses by the end of next year.
Other contenders in the race to develop the first Covid-19 vaccine include GlaxoSmithKline, Sanofi, Pfizer and Boston-based biotech Moderna.
Research for a treatment has focused on either stemming viral replication or addressing an immune system overdrive known as cytokine storm, with big pharma groups including Roche, Novartis and Gilead testing their candidates in trials.
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