With traders increasingly worried about the housing market and the credit crunch, health products maker Johnson & Johnson (NYSE: JNJ) gave an optimistic note to Wall Street by posting a surprising growth in its first-quarter profit. The company reported better-than-expected earnings, with some help from favorable exchange rates.

For the quarter, the company said that its profit surged 40% to $3.6 billion, or $1.26 per share, helped by strong sales of many key products. These numbers are up from $2.57 billion, or 88 cents a share, reported in the same period a year earlier. Analysts, on average, expected the company to show quarterly earnings of $1.20 a share.

The health products maker posted growth of 7.7% for its first-quarter revenue, which climbed to $16.19 billion from $15.04 billion a year earlier. During the period, Johnson & Johnson benefited from the weak dollar which was a major driver for its consumer products sales. Analysts expected the company show revenue of $15.83 billion in the third quarter, according to Thomson Financial.


Despite a weak economy that has put a curb on consumer spending, J&J had a good overall 2007. The company's new allergy drug, Zyrtec, has been a catalyst for its consumer product business sales which jumped 16 percent to $4.06 billion. Johnson & Johnson's cost savings plans also proved effective in its fight against strong competition, offsetting low revenues from key anemia drug Procrit.

Looking ahead, the company plans to "continue to invest in growth opportunities that are critical to our future and are continuing to manage our costs," J&J's chief financial officer, Dominic Caruso, stated.

Johnson & Johnson's positive earnings gave investors' some hope amid the challenging market conditions, but it looks like investors are still concerned about the company's domestic sales which showed small gains compared with its overseas sales which benefited from the weak U.S. currency.

Eliza Popescu is a financial writer for the online investment advisory service Investor's Observer.