Clorox Profit Beats Estimates, Sticks With 2004 Outlook
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Clorox Co. (CLX) on Tuesday said quarterly profit fell on charges related to the household product maker's shutdown of a Glad plastic bag factory, though earnings beat expectations.
Clorox, whose shares rose 1 percent, said it was sticking with its full-year profit outlook, despite beating expectations, because further increases in materials costs are likely. Cost-cutting measures helped the company mitigate rising raw material prices in the quarter.
"(The) recent quarter is a step in the right direction for Clorox, which is growing the top-line through niche new product activity while boosting margins through promotional efficiency and other cost savings programs," said Andrew Shore, analyst at Deutsche Bank, who rates Clorox "hold."
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"However, the stock is not cheap at current levels and higher input costs and a tough competitive environment keep us on the sidelines," he wrote in a research report.
Net income dropped to $123 million, or 57 cents per share, in the fiscal first quarter ended Sept. 30, from $129 million, or 60 cents, a year earlier.
The company, which also makes its namesake bleach, Kingsford charcoal (search) and Hidden Valley (search) salad dressing, as previously announced took a $30 million pretax charge, or 9 cents a share, in the quarter, largely due to the shutdown of a Glad plant in Georgia.
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Analysts expected the Oakland, Calif.-based company to earn 53 cents to 54 cents a share, with a mean target of 54 cents, according to Reuters Estimates.
Sales rose 4 percent to $1.09 billion. Volume also rose 4 percent, boosted by record shipments of disinfecting wipes and new products.
Clorox forecast earnings of 48 cents to 52 cents a share in the second quarter, excluding a transaction involving German soaps and adhesives company Henkel KGaA (search). Analysts on average forecast 51 cents a share, according to Reuters Estimates.
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Last month, Henkel KGaA agreed to shed its 29 percent stake in Clorox to raise funds to pay for its purchase of Dial Corp. The deal with Clorox gives Henkel $2.1 billion in cash, ownership of some Clorox brands and a stake in a Spanish joint venture. Henkel is selling 61.4 million shares in Clorox. The deal is expected to close by Dec. 1.
The company forecast sales increasing 3 percent to 5 percent in the second quarter.
For the year, the company stood by its earnings forecast of $2.58 to $2.66 a share, with sales up 3 percent to 5 percent, excluding the Henkel deal.
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Clorox shares rose 55 cents to $55.70 Tuesday on the New York Stock Exchange (search).