The Clorox Company
) came up with higher-than-expected earnings for first-quarter
fiscal 2014. The company's earnings per share of $1.04 from
continuing operations surpassed the Zacks Consensus Estimate of
$1.00 and rose nearly 3.0% from the year-ago quarter figure
Quarterly earnings of the company were primarily driven by
increased pricing, higher volume and effective cost management,
partially offset by adverse foreign currency exchange rates and
increase in manufacturing and logistics costs as well as
Net sales marginally improved year over year to $1,364 million
from $1,338 million in the year-ago quarter. Benefits from
increased pricing, higher volumes as well as favorable product
mix and assortments were partially offset by unfavorable foreign
exchange rates. Total volume inched up 1% in the quarter.
Moreover, total revenue surpassed the Zacks Consensus Estimate of
Revenues by Segment
Sales in the
segment nudged up 1% to $479 million, primarily driven by
increased pricing and favorable mix and assortment. During the
quarter, the segment witnessed volume growth in its Professional
Products and Laundry businesses, while shipment of disinfecting
sales increased 5% to $372 million primarily due to the company's
increased pricing strategy, higher volume and reduced trade
promotion spending. Volumes in the quarter benefited from
increased shipment for Charcoal. This occurred due to strong
summer holiday merchandising events and higher shipments for Cat
Litter owing to the introduction of new products.
Sales at the
segment rose 5% to $218 million, primarily due to an increased
pricing, higher volume and favorable mix and assortment,
partially offset by higher trade promotion spending. Segment
volume increased 4% year over year.
business segment, Clorox's sales fell 3% to $295 million, due to
unfavorable currency translation, partially offset by increased
pricing. Excluding currency effect, sales increased 4% year over
year. Segment volume remain flat year over year as volume gains
in Latin America, the Middle East and Asia were fully offset by
volume declines in Venezuela, Argentina and Canada.
Costs and Margins
Clorox's gross margin remains flat year over year at 42.9%.
The year-over-year flat gross margin was primarily due to the
company's price increase and strong cost saving initiatives,
partially offset by increase in manufacturing and logistics costs
as well as commodity costs. Consequently, operating margin from
continuing operations marginally improved to 17.1% in the quarter
from 17.0 in the year-ago comparable quarter, primarily driven by
aggressive cost cuts.
Balance Sheet and Cash Flow
Clorox ended the quarter with cash and cash equivalents of
$323 million and long-term debt of $2,170 million. At the
quarter-end, the company generated $179 million of net cash from
operations against $208 million at the end of first quarter of
fiscal 2013, primarily due to higher tax payments.
Anticipating pressures from unfavorable foreign currency
exchange rates and increased commodity costs, Clorox has lowered
its sales and earnings forecasts for fiscal 2014. The company now
expects sales to grow in the range of 2%-3%, instead of 2%-4%
projected earlier. Further, earnings per share are now expected
to be $4.45-$4.60, down from earlier forecast of $4.55-$4.70.
The company, which competes with
Church & Dwight Company Inc.
Procter & Gamble Company
) also, lowered its operating margin expansion anticipation in
the range of flat to 25 basis points (bps) in fiscal 2014 from
the previous projection of 25-50 bps.
Headquartered in Oakland, California, Clorox is primarily
engaged in the production, marketing and sale of consumer
products in the U.S. and international markets. This Zacks Rank
#4 (Sell) company sells its products primarily through mass
merchandisers, grocery stores and other retail outlets. Clorox
manufactures products in more than 24 countries and markets them
in more than 100 countries.
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