Kenvue shares fell on Thursday although the buyer health company beat second-quarter revenue and earnings expectations within the its first quarterly report because it spun out from Johnson & Johnson two months ago.
The corporate, formerly J&J’s consumer health division, also issued an upbeat sales outlook for 2023.
Kenvue CEO Thibaut Mongon said during an earnings call that the buyer landscape “continues to be uncertain” and the corporate expects “market volatility will proceed.” But he noted that buyers are still willing to purchase “trusted” and “efficacious” health products.
Kenvue’s beat was driven by resilient demand for its wealth of widely known brands comparable to Band-Aid, Tylenol, Listerine, Neutrogena and Aveeno.
“This quarter was yet one more proof point, showcasing the facility of our portfolio,” Mongon said through the call.
J&J still owns a 90% stake in Kenvue, meaning it could actually generally control the direction of the spinoff’s business for now.
J&J will reduce its stake in Kenvue through an exchange offer that would launch “as early as the approaching days,” J&J CFO Joseph Wolk said during an earnings call on Thursday. That supply will allow J&J shareholders to exchange all or a portion of their shares for Kenvue’s common stock.
J&J reported its own second-quarter earnings on Thursday, which included Kenvue’s results.
Here’s how Kenvue results compared with Wall Street expectations, based on a survey of analysts by Refinitiv:
- Earnings per share: 32 cents adjusted, vs. 30 cents expected
- Revenue: $4.01 billion, vs. $3.96 billion expected
Shares of Kenvue closed nearly 2% lower Thursday. After a powerful debut on the general public market in May, the stock has struggled as investors query how much growth the corporate can deliver with its iconic brands as consumers pull back on spending.
Kenvue’s stock has shed greater than 9% because it debuted on the general public market, dragging its market value right down to roughly $47 billion.
Kenvue, a unit of Johnson & Johnson’s consumer health business.
CFOTO | Future Publishing | Getty Images
Kenvue on Thursday also initiated a quarterly money dividend of about 20 cents per share for the third quarter, payable to shareholders on Sept. 7.
Unlike most up-to-date IPOs, Kenvue is already profitable.
The corporate posted second-quarter sales of $4.01 billion, up 5.4% from the identical period a yr ago. Foreign exchange headwinds dragged on sales by around 2.3%, in accordance with Kenvue.
It reported a net income of $430 million, or 23 cents per share, compared with $604 million, or 35 cents per share, a yr earlier. Excluding certain items, the corporate’s adjusted earnings were 32 cents a share.
Kenvue is forecasting 2023 sales growth of 4.5% to five.5%. In April following its IPO, Kenvue said it expects annual sales growth through 2025 to be about 3% to 4% globally.
The corporate’s full-year adjusted earnings outlook is $1.26 to $1.31 per share. Analysts surveyed by Refinitiv expected $1.23 per share.
The corporate reported sales growth across its three business divisions within the second quarter.
Kenvue’s self-care unit, which incorporates products for eye care, cough and cold and vitamins, generated $1.66 billion in sales for the quarter. That rose 12.2% from a yr ago, fueled by increased demand from higher cough, cold and flu cases.
Skin health and wonder products accounted for $1.15 billion in sales, which climbed 1.9% from a yr ago. Amongst those products are shampoos, conditioners, hair loss treatments and skincare.
Items within the essential health division, including baby products, mouthwash and dental rinses, sanitary protection and wound care, saw $1.20 billion in net sales, up 0.5% from the identical period a yr ago.
Kenvue’s IPO still left J&J responsible for hundreds of allegations that its talc baby powder and other talc products caused cancer.
Those products fall under the corporate’s consumer-health business, now Kenvue, however the spinoff will assume only talc-related liabilities that arise outside the U.S. and Canada, in accordance with its IPO filing from January.
There are only a “small number” of lawsuits outside of the U.S. and Canada that “we don’t consider material at this stage,” Mongon said on the Deutsche Bank Global Consumer Conference last month.
