Clorox 4th-Quarter Profit Beats Reduced Forecasts
Clorox Co.’s fiscal fourth-quarter profit fell 22%, the company said Wednesday, as the maker of Glad trash bags and its namesake bleach lost sales to less-costly store brands.
During the period, the Oakland-based manufacturer also dropped a $175-million purchase in Brazil.
Profit from operations beat reduced forecasts, falling to $108 million, or 45 cents a share, from$138 million, or 58 cents, a year earlier. Sales in the quarter ended June 30 fell 2.7% to $1.1 billion, the company said.
Higher advertising spending will continue to hurt results in fiscal 2002, Chief Executive Craig Sullivan said.
“The challenges we faced in the second half of fiscal 2001 will continue to be present for at least the first half of fiscal 2002,” he said.
Growth in unit volume, or the number of products sold, will be “modest” in the next year, Sullivan said.
Sales of Clorox disinfecting spray, Hidden Valley salad dressings and Pine-Sol cleaner have fallen as U.S. consumers switched to cheaper private-label brands. Although Clorox has spent more to advertise its lines, that increased spending and rising energy prices have dragged down profit the last three quarters.
“Their brands have gotten stale,” said David Yucius, portfolio manager with Aurora Investment Counsel, which sold 15,000 Clorox shares in the last month. “They haven’t done as much marketing as they needed to for the past couple of years. They are now having to spend more and promote more.”
Clorox’s board authorized the repurchase of $500 million in stock in the next two to three years, using excess cash generated from operations, the company said. That would equal 14.2 million shares at Tuesday’s closing price, or 5.9% of outstanding shares.
Clorox, which has lowered estimates twice since December, was forecast to earn 43 cents, the average estimate of analysts surveyed by Thomson Financial/First Call.
Clorox shares rose 36 cents to close at $35.66 on the New York Stock Exchange.
Clorox said it won’t proceed with its purchase of a 50% stake in a unit of Brazil’s Bombril, after Bombril shareholders didn’t meet terms of the agreement.
Falling currencies in Latin America and South Korea were blamed for a 7% drop in Clorox’s international sales.
Clorox said it took charges totaling $27 million in the most recent quarter to close a cat litter factory, making net income $81 million, or 34 cents a share. A year-earlier charge of $13 million, or 6 cents, related to the acquisition of First Brands Corp. resulted in net income of $125 million, or 52 cents.
