J&J: McNeil problems continue, increasing costs

Johnson & Johnson said first quarter profit rose, but there was slight decrease in total sales and the company is facing increasing costs and delays in fixing the problems at the McNeil Consumer Health Care facility in Fort Washington.

Chief Financial Officer Dominic Caruso had said earlier that well-known consumer brands such as Tylenol and Motrin wouldn't be produced in Fort Washington until 2013, but he said Tuesday that the pace repairs and upgrades was taking longer than hoped.

"We're obviously disappointed that it is taking a little longer to get back into the market," Caruso said on a conference call with stock market analysts. Journalists were allowed to listen but not ask questions. "But all of the indicators of the equity scores that we track with brands continue to show - both Tylenol and Motrin, but especially childrens' products - very highly compared to store brands even though they are not on the shelf, so much so that the scores are in the neighborhood of two to three times the level of trust and confidence in the brands compared to the currently available brands, particularly store brands.

"That gives us great confidence that the significant legacy that has been built over the years still remains with consumers and they will accept the products once we get them back on the shelves in a continuous way."

Caruso did not explain the particular problems in Fort Washington.

McNeil also has plants in Lancaster and Puerto Rico. Those plants are operating, unlike Fort Washington, but all are supposed to be under greater scrutiny from a third-party observer as part of a court-approved consent decree.

The decree was part of an agreement with the U.S. Food and Drug Administration after consumers complained that products had a musty smell and they found tiny metal particles in some liquids. The company later attributed the musty smell to chemicals used to treat wooden pallets.