Former Chief Executive Officer & Director, Kenvue Inc.
Kenvue CEO talks Q3 earnings beat, growth outlook, class action lawsuit
Kenvue (KVUE) announced on Thursday it would cut its annual profit forecast after seeing a weakening demand for cold and flu ...
About Thibaut Mongon
Thibaut Mongon, as CEO of Kenvue, has discussed the company’s performance and strategy following its spin-off from Johnson & Johnson in May 2023. In earnings calls and media appearances, Mongon described 2023 as a “transformational” year and highlighted the company’s financial results, including $4 billion in revenue and 7.7% organic growth in the second quarter, which he called one of the strongest quarters in the company’s history. He noted that the company maintained its guidance for the full year but tightened the range to reflect a softer start to the cold and flu season. Mongon also addressed a class action lawsuit related to the efficacy of a product, stating that the company saw no impact to the business and that the FDA had not made any determination on the matter. Mongon outlined three key priorities for 2024: reaching more consumers by focusing on 15 priority brands, freeing up resources to invest in those brands, and fostering a culture that rewards performance and impact. He acknowledged challenges in the U.S. skin health and beauty segment, particularly with the Neutrogena brand, and said that restoring its growth was a priority. Mongon also discussed the company’s employee well-being initiatives, including a global employee assistance program and a “global care day” for employees. He expressed confidence in the company’s business model and portfolio, stating that Kenvue was focused on fundamentals and building a strong foundation as an independent company.
Transcript (12 segments)
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Narrator0:00
Kenvue, the former consumer health operations of Johnson & Johnson, saw third quarter net sales and organic growth increase. Meanwhile, a slow start to the cold, cough, and flu season contributed to a tightening in the company's 2023 outlook. Joining us now to discuss this and more is Kenvue CEO Thibaut Mongon alongside Yahoo Finance's Anjalee Khemlani. A big welcome to you both.
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Anjalee Khemlani0:22
So first I want to start on what we've seen with earnings, especially as we factor in some of the things that we've been seeing with cold and flu season and how you see that affecting the bottom line from here on out.
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Thibaut Mongon0:33
Yes, good morning Rachelle, good morning Anjalee, good to see you again. Yeah, we had a healthy quarter in Q3 with $3.9 billion in revenue, 3.6% growth on top of 4.7% growth last year. That shows the power of the portfolio we have at Kenvue and the strength of our model. We announced another 20 cent dividend per share payable in November, so pleased with our results and confident in our future. And to your point about the future, we have maintained the base of our guidance for the full year but tightened it to reflect a soft start of the cold and flu season. But we see once again here the power of the Kenvue portfolio, even if we see some softness potential in the cold and flu season, we see other parts of the portfolio doing very well, like smoking cessation, allergy, digestive health, and other parts of the portfolio. So we are confident in our future. We continue to innovate for consumers around the world. Winter is coming, as we just talked about, it's important for cold and flu but it's also important in skin care with moisturizers being a big part of the winter regimen. We are launching a new Neutrogena gel cream that gives you nine times more hydration. So confident in the coming quarter and the future at Kenvue.
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Anjalee Khemlani2:01
Well, it's really good to see you again. I know that part of the story for the company is basically recovery, there's a lot to go into operating solo, and you did mention of course the headwinds and the strong dollar. So can you tie that together and talk to us about what we really should be looking for in the Kenvue story for 2024?
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Thibaut Mongon2:24
Yeah, we continue to build up our company as a fit-for-purpose standalone company focused on the consumer, and are on track with the program moving into the future. We continue to focus on what we have done for 135 years and do best, which is being close to consumers, making sure that we bring to them the products and solutions they need to take care of their own health and the health of their loved ones. And we do it across the portfolios. So what we can expect for '24 is continued consumer intimacy, continued innovation. I talked about innovation in skincare and self-care. We just launched a new product called Motrin Dual Action that puts together ingredients from two iconic brands, Motrin and Tylenol, and it has been very well received by consumers in the US. So these are just two examples of the vibrancy of the portfolio we have, and we continue to be very close to consumers today and in the future.
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Anjalee Khemlani3:26
And we know of course right now a lot of consumers are very price conscious at the moment. Are there certain demographics that you're going to be targeting either domestically here in the US or internationally?
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Thibaut Mongon3:35
Yeah, we see that consumers are more choiceful, but frankly they've always been choiceful. And when you are talking about your health or the health of your loved ones, what we see consumers doing is continuing to reach out to brands they trust that are backed by science, recommended by healthcare professionals. And when you look at the Kenvue portfolio, it's really what Kenvue is all about: Tylenol, Benadryl, Neutrogena, Listerine, Motrin, and so many other brands that have been in people's homes for years, decades, generations sometimes. That's what brands consumers reach out to, and that's why we see that private label penetration in our categories is stable, slightly down actually in the recent past, because consumers go for trusted brands, and that's what we offer at Kenvue.
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Anjalee Khemlani4:30
I know that you mentioned on the call that the cold and flu revenue is really about 2% of the total company sales, and I know that there's also other small areas where Kenvue does play, including of course the big story about weight loss drugs and the anti-nausea medication. You do have one product in that category. Have you noticed any movement at all when it comes to sales there, or is it too small to track?
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Thibaut Mongon4:58
Yeah, we see strong demand in our digestive health segment. We have a strong brand called Imodium that is doing very well, and we see increased demand for this brand in the US and around the world. And that's the power of the Kenvue portfolio. We have very strong positions in a number of different categories, and that allows us to deliver sustained performance over time. So the focus for us is to be here when consumers need us with the products that they need, always backed by science, recommended by healthcare professionals.
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Anjalee Khemlani5:39
I do have to ask about some news that crossed this morning regarding the class action lawsuit surrounding the efficacy of Phenylephrine and whether or not some of the alleged risks weren't fully disclosed during the IPO process. How do you see that affecting investors here? What message would you give them about some of this news that's coming out?
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Thibaut Mongon6:00
Yeah, we don't see any impact to the business to date. What we know is that health authorities around the world review ingredients on a routine basis. In this particular case, it's important to note that the FDA has not made any determination. There is a clear process that they are going through, and we'll continue to work with the agency and with customers to make sure that consumers continue to have access to the products they need when they need them.
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Anjalee Khemlani6:30
We appreciate you taking the time to join us and congratulations on a bumper earnings season as well. Thibaut Mongon, Kenvue Chief Executive Officer, and our very own Anjalee Khemlani. A big thank you to you both. Thank you.