Clorox Q1 Profit Up 2%, Results Beat View; But Lowers Full-year Outlook

(RTTNews) - Consumer products company Clorox Co. (CLX) on Thursday reported a 2 percent increase in profit for the first quarter from last year, reflecting cost savings, higher volumes and price increases. These helped offset foreign currency declines and increasing commodity costs.

Both revenue and earnings per share for the quarter beat analysts' expectations. Looking ahead to fiscal 2014, the company lowered its earnings outlook as well as the top end of its revenue guidance range.

Don Knauss, Chairman and CEO of Clorox said, "We're off to a good start in the fiscal year, delivering 2 percent sales growth. Excluding the impact of foreign currencies, sales grew 3.5 percent. We also delivered strong pretax profit growth of 7 percent."

Knauss added that like other companies, Clorox continue to face headwinds, including foreign currency declines and increasing commodity costs. In addition, the company is facing heightened competitive activity that is expected to continue through the fiscal year.

Oakland, California-based Clorox operates in four segments - cleaning, lifestyle, household, and international. Sales increased in three of the four segments, reflecting the benefit of price increases, higher volume and favorable mix and assortment, partially offset by unfavorable foreign currency exchange rates.

Cleaning segment sales for the first quarter rose 1 percent, while household segment sales grew 5 percent and lifestyle segment sales increased 5 percent. International segment sales declined 3 percent.

Clorox's net earnings for the first quarter were $136 million or $1.03 per share, up from $133 million or $1.01 per share in the previous-year quarter. On average, seventeen analysts polled by Thomson Reuters expected the company to report earnings of $1.01 per share for the quarter. Analysts' estimates typically exclude special items.

According to the company, the latest results reflect the benefit of strong cost savings, higher volume and price increases, partially offset by an increase in manufacturing and logistics costs, higher commodity costs and unfavorable foreign currency exchange rates.

Net sales for the quarter rose 1 percent to $1.36 billion from $1.34 billion in the same period last year. Analysts had a consensus revenue estimate of $1.35 billion. Excluding the impact of foreign currency declines, sales grew 3.5 percent.

Volume for the quarter increased 1 percent, driven by gains in the company's Professional Products, Charcoal, Laundry and Burt's Bees businesses, partially offset by declines in Home Care.

The company's gross margin for the quarter was flat with the year-ago period at 42.9 percent. The company noted that the benefits of strong cost savings and price increases were offset by higher manufacturing and logistics costs due, in large part, to inflationary pressures in Argentina and Venezuela, as well as higher commodity costs.

Looking ahead to fiscal 2014, Clorox now expects earnings per share from continuing operations in a range of $4.45 to $4.60.

The company now anticipates sales growth for the year in a range of 2 percent to 3 percent. This reflects a greater impact from unfavorable foreign currencies in Argentina and other countries, which are now expected to hurt sales by up to 2 percentage points, versus a previous assumption of 1 percentage point.

The company's previous forecast was for full-year earnings per share from continuing operations in a range of $4.55 to $4.70, and sales growth in a range of 2 percent to 4 percent.

Analysts expect the company to earn $4.58 per share for the year on revenues of $5.76 billion.

Chief Financial Officer Steve Robb said, "Our fiscal 2014 outlook now reflects heightened pressure on sales and earnings, primarily from the impact of unfavorable foreign currency exchange rates across multiple countries. In addition, it reflects the impact of elevated commodity costs on our margins."

In Thursday's regular session, CLX is trading at $90.94, up $0.81 or 0.89 percent on a volume of 899,405 shares.