Last week brought about second quarter financial reporting from a number of significant manufacturing companies.
- After a third straight quarter to declining sales, Johnson & Johnson said it expects sales to pick up in the second half of the year as demand increases for newer, pricey teatments such as cancer drugs Darzalex and Imbruvica. The company reported better-than-expected quarterly earnings and raised its full-year profit forecast. Pharmaceutical companies continue to face pricing pressures from all directions, including the White House. J&J has pledged to keep annual price increases mostly below 10 percent. What remains to be seen is how lower profit margins will impact the development of new drugs.
- SAP's second quarter showed growth in the cloud market, which raised its outlook for the financial year. Q2 financials showed core revenue up 10.4 percent on a 33 percent increase in cloud bookings. In the coming financial year, SAP expects cloud subscriptions and support revenue to grow by 34 percent.
- Honeywell International reported better-than-expected quarterly profits, as sales in its aerospace and energy business units exceeded expectations. Sales in Honeywell's aerospace business fell about three percent in the second quarter, smaller than the company's forecasted decline of five to seven percent. Margins in the unit rose to 22.3 percent from 20.9 percent based on growth in U.S. defense volumes.
- In related news, the Pentagon’s leading weapons supplier, Lockheed Martin, reported a better-than-expected quarterly profit and expects increased defense spending under President Trump to spur additional earnings. Lockheed's net income rose nearly five percent in the second quarter. Part of this increased defense spending has been additional funding for Lockheed’s F-35 jets. Additionally, the company is in the running to win a portion of six or seven multi-billion dollar contracts that are scheduled to be awarded this year.
- Samsung Electronics said its second-quarter operating profit rose 72 percent from a year earlier to a new record, as strong memory chip prices helped widen margins. Revenue rose 18 percent. The company also announced plans to invest $18.6 billion in its memory chip and next-generation display business. Analysts say the memory chip industry should remain strong for a couple of years as demand for cloud computing and artificial intelligence grows.
- General Electric (GE) reported a dip in second-quarter profit and revenue due to lackluster performance from its energy connections unit. The company reported a 53 percent drop in profit, despite its power, renewable energy, and health care operations all registering revenue gains during the quarter. However, its energy connections and lighting unit reported a 27 percent dip in revenue, weighing down the overall results. GE shares have dropped 16 percent since the beginning of the year, and 19 percent in the last 12 months.