Clorox To Exit Venezuela, Reiterates 2015 Outlook

(RTTNews) - Consumer products maker Clorox Co. (CLX) said Monday that it is exiting its operations in Venezuela with immediate effect, due to considerable operating losses at the unit that would continue into the foreseeable future. Looking ahead, the company reaffirmed its financial outlook for fiscal 2015.

Clorox said it affiliate Corporación Clorox de Venezuela S.A., or Clorox Venezuela, is no longer viable and the company is now seeking to sell the unit's assets.

The company noted that for nearly three years, it was required to sell more than two-thirds of its products at prices frozen by the Venezuelan government.

However, during the same time, the Venezuelan unit experienced cumulative triple-digit inflation that resulted in massive increases in input costs, including packaging, raw materials, transportation and wages. As a result, Clorox Venezuela was selling its products at a loss, causing ongoing operating losses.

Clorox repeatedly met with the Venezuelan government authorities and requested for immediate, significant and ongoing price increases as well as other critical remedial actions to address these adverse impacts.

Following the representations, Clorox Venezuela had expected significant price increases would be forthcoming much earlier this year. However, the company noted that price increases subsequently approved by the government were "nowhere near sufficient", and would have caused Clorox Venezuela to continue operating at a significant loss.

As a result, the business is no longer viable and therefore, Clorox Venezuela has been forced to discontinue its operations.

Looking ahead to fiscal 2015, Clorox reiterated its outlook for earnings from continuing operations in a range of $4.35 to $4.50 per share and sales to be about flat. On average, analysts polled by Thomson Reuters expect the company to report earnings of $4.42 per share for the year on revenues of $5.59 billion.

The company said that following its exit from Venezuela, the unit's historical and future financial results will be reflected as discontinued operations.

For fiscal year 2015, Clorox's discontinued operations will also include anticipated after-tax exit costs of $60 million to $65 million, or $0.46 to $0.50 per share.

In addition, discontinued operations may reflect after-tax exit costs of about $10 million to $15 million over the next three fiscal years. The company expects cash-related exit costs, net of expected tax benefits, to be $5 million to $10 million.

CLX is currently trading at $95.86, up $5.29 or 5.85 percent on a volume of 599,319 shares.