Clorox Q4 Profit Down 7%, Results Miss View; Backs 2015 Outlook

(RTTNews) - Consumer products company Clorox Co. (CLX) on Friday reported a 7 percent decline in profit for the fourth quarter from last year, reflecting the impact of unfavorable foreign currency exchange rates and higher costs. These largely offset the benefit from price increases, while volumes were flat with last year.

Both revenue and earnings per share for the quarter missed analysts' expectations. However, the company affirmed its financial outlook for fiscal 2015.

Oakland, California-based Clorox operates in four segments - cleaning, lifestyle, household, and international.

Cleaning segment sales for the fourth quarter declined 1 percent and international segment sales decreased 8 percent. Household segment sales declined 2 percent, while lifestyle segment sales rose 2 percent from the year-ago period.

Clorox's net earnings for the fourth quarter were $170 million or $1.29 per share, down from $183 million or $1.37 per share in the previous-year quarter.

Earnings from continuing operations for the quarter declined to $170 million or $1.30 per share from $184 million or $1.38 per share in the year-ago quarter.

On average, seventeen analysts polled by Thomson Reuters expected the company to report earnings of $1.35 per share for the quarter. Analysts' estimates typically exclude special items.

According to Clorox, the latest quarter's results reflect higher manufacturing and logistics costs as well as increased commodity costs. In addition, the company invested $20 million in incremental demand-building initiatives compared to year-ago quarter, impacting earnings per share by $0.10.

These factors were partially offset by the benefits of strong cost savings and price increases, in addition to lower selling and administrative costs from reduced incentive compensation accruals.

Net sales for the quarter declined 2 percent to $1.51 billion from $1.55 billion in the same period last year. Analysts' revenue consensus was $1.52 billion. Excluding the impact of nearly 3 percent from foreign currency declines, sales grew 0.5 percent.

The decline in sales for the quarter were due to the impact of unfavorable foreign currency exchange rates and higher trade promotion spending, partially offset by the benefit of price increases.

Volume for the quarter was flat with last year, reflecting decreases in the Glad, Litter and Laundry businesses, partially offset by growth in the Charcoal, Natural Personal Care and Professional Products businesses.

Clorox's gross margin for the quarter was 42.3 percent, reflecting a decline of 170 basis points compared to the year-ago quarter.

The company noted that the benefits of strong cost savings and price increases were more than offset by higher commodity costs and about 240 basis points of higher manufacturing and logistics costs largely due to inflation in international markets.

For fiscal 2014, Clorox's net earnings declined to $558 million or $4.23 per share from $572 million or $4.30 per share last year. Net earnings from continuing operations for the year were $562 million or $4.26 per share, down from $574 million or $4.31 per share in the prior year.

Net sales for the year edged down less than 1 percent to $5.59 billion from $5.62 billion in the prior year. On a currency-neutral basis, sales rose 1.8 percent.

Street expected the company to earn $4.32 per share for the year on revenues of $5.61 billion.

Looking ahead to fiscal 2015, Clorox affirmed its outlook for earnings per share from continuing operations in a range of $4.35 to $4.50, and sales to be about flat. On a currency-neutral basis, the company anticipates sales growth in a range of 1 percent to 3 percent for the fiscal year.

Analysts expect the company to report earnings of $4.47 per share for the year on 0.4 percent increase in revenues to $5.64 billion.

CLX is currently trading at $87.95, up $1.08 or 1.24 percent on a volume of 290k.