updated 1/20/2009 3:14:34 PM ET 2009-01-20T20:14:34

Health care products maker Johnson & Johnson on Tuesday posted a 14 percent increase in fourth-quarter profit, topping Wall Street forecasts, as big one-time gains offset slumping sales.

But the maker of baby shampoo, contraceptives and other health items forecast weaker results in 2009, blaming the global recession, unfavorable currency exchange rates and intensified pressure from both generic drugs and competitors’ new products.

Still, its CEO said the economic uncertainty and J&J’s strong cash flow — $12.2 billion in 2008 — put the company “in a great position” to acquire companies or products.

New Brunswick, N.J.-based J&J earned $2.71 billion, or 97 cents per share, up from $2.37 billion, or 82 cents per share, in the year-ago quarter. Revenue fell 4.9 percent to $15.18 billion from $15.96 billion — the first drop since the end of 2004.

Excluding charges and gains, J&J earned 94 cents a share. Analysts polled by Thomson Reuters expected profit of 92 cents per share on revenue of $15.93 billion. The one-time items included a $141 million research charge, and $638 million in income for favorable settlements of lawsuits and other items.

Analysts called it a “decent” quarter but were disappointed by the reduced 2009 forecast.

“Initially, it threw people for a loop,” said health care analyst Tim Nelson of First American Funds.

William Weldon, chief executive and chairman, said J&J’s fourth-quarter revenues were reduced across the board by the global recession, as people worried about unemployment and losing health insurance cut back on doctor visits, elective surgery and use of prescription medicines. He noted that sales of consumer items such as contact lenses and diabetes test strips have fallen as “consumers are becoming more frugal.”

“I don’t think we’re going to see a reversal in the near term,” Weldon told The Associated Press in an interview.

Unfavorable currency rates cut J&J’s fourth-quarter revenue by 3.9 percent — after favorable rates boosted sales so much earlier in 2008 that they still lifted revenue by 2.4 percent for the full year.

The company issued a 2009 forecast for earnings of $4.45 to $4.55 per share. That’s below average analyst estimates of $4.61, which J&J said excludes the 3-cent to 5-cent impact of buying breast implant and cosmetic product maker Mentor Corp., a deal set to close this month. Johnson & Johnson included that amount in its forecasts.

“They are rightly conservative in their 2009 guidance,” given the volatility in currency markets and cutbacks in consumer health spending, said health care analyst Les Funtleyder of Miller Tabak & Co.

Despite that, Weldon sounded optimistic, especially about chances for snapping up companies, products or medicines in development.

“I think the opportunities this year are going to be extraordinary,” Weldon told analysts.

He said in an interview that J&J is reviewing possible deals across all its businesses.

“We have the financial strength to do probably anything we want,” Weldon said.

Funtleyder said J&J will have chances to do deals, because many health care companies need capital, but perhaps not till 2010.

The quarterly revenue drop was led by an 11 percent plunge in pharmaceutical sales to $5.7 billion. That decline was partly due to a 66.5 percent drop in sales of schizophrenia drug Risperdal, which got generic competition last June. Pain patch Duragesic and Razadyne, for dementia related to Alzheimer’s disease, also have generic competitors.

“We expected it to be bad, but it was worse than expected,” Nelson said of the segment.

Medical-device sales fell by 2 percent, to $5.6 billion. Consumer products eked out a 1.2 percent increase in sales to $3.9 billion, helped by the launch of allergy treatment Zyrtec as an over-the-counter medicine and the purchase of Chinese skin-care company Dabao.

Globally, sales were down in every region but Asia/Pacific and Africa.

Weldon noted that J&J has bought back $8.1 billion worth of its shares under a $10 billion buyback program.

“We were the third-best performer in the Dow for 2008,” with share price down only 8 percent, compared with 30 percent or more for some stock indexes, he said.

For the full year, net income jumped 22 percent, to $12.95 billion, or $4.57 per share, while revenue rose 4.3 percent, to $63.75 billion.

© 2013 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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