* First-quarter profit $1.01/share tops Street view $0.95
* Still expects FY 2013 profit $4.20-$4.35/share
* Sales up 3 percent, volume down 1 percent
* Hurricane Sandy cleanup could boost Clorox bleach sales
* Shares slip 0.5 pct in morning trade
By Jessica Wohl
Oct 31 Clorox Co posted a higher
quarterly profit and maintained its forecast for the fiscal
year, buoyed by price increases, cost cuts and a
lower-than-anticipated tax rate, which helped mitigate the
impact of a drop in volume.
Over the past few years Clorox has raised prices on a
variety of products, such as its namesake bleach, Pine-Sol
cleaners, GladWare disposable containers and Brita water
filters, as it has faced higher costs for materials.
While the price increases have helped offset those higher
costs, they have also led some shoppers to choose lower-priced
alternatives, such as store-branded products. Clorox has been
advertising "bleachable moments" and using other campaigns to
entice shoppers to buy its branded goods.
Clorox said on Wednesday that it saw its highest volume
growth of bleach in more than two years and had record shipments
of Clorox disinfecting wipes, while facing declines in products
such as Pine-Sol, Clorox 2, charcoal and cat litter.
However, sales growth slowed from recent quarters and volume
fell for the first time in almost two years.
"It was margin-driven and the topline decelerated a little
bit," said RBC Capital Markets analyst Jason Gere.
"The story is very similar to what we saw at Colgate and
what we saw at Kimberly-Clark," he said. "The last couple of
quarters their upside had come from better topline growth."
Clorox bleach sales could potentially see a boost in coming
weeks as East Coast residents clean up from the massive storm
Sandy. Bleach is often used in cleanups after major storms.
While Oakland, California-based Clorox posted its earnings
on Wednesday, as expected, it postponed a conference call until
Friday as analysts and investors on the East Coast continue to
deal with disruptions after the storm.
Clorox's sales rose 3 percent to $1.34 billion, just short
of analysts' expectations of $1.35 billion, according to Thomson
Reuters I/B/E/S. The volume of goods sold declined 1 percent.
The decline in volume was not a surprise "considering the
weakened U.S. macro-environment," said Wells Fargo analyst Tim
Colgate-Palmolive Co and Kimberly-Clark Corp
last week both said quarterly sales fell while volume rose.
Shares of Clorox were down 0.5 percent at $71.75 on
Wednesday morning on the New York Stock Exchange.
TAX RATE HELPED PROFIT
Clorox earned $133 million, or $1.01 per share, in the
fiscal first quarter ended Sept. 30, up from $130 million, or 98
cents per share, a year earlier.
Analysts had expected a profit of 95 cents per share.
Clorox said that its tax rate of 31.6 percent was lower than
the planned rate of 34 percent because of a recent international
tax settlement. It expects its full-year tax rate will be 33 to
Clorox started to introduce a concentrated version of its
well-known bleach in August, a year after it raised the U.S.
price of bleach by 12 percent.
The smaller bottles of concentrated bleach cut costs and are
more environmentally friendly, as Clorox uses less water and
packaging to make the product and needs less fuel for transport.
They also allow retailers to fit more bottles on shelves.
Gross margin increased to 42.9 percent from 41.8 percent a
year earlier, helped by cost-cutting and the lift from various
price increases. Still, Clorox faced some inflation in
manufacturing and logistics, as well as higher selling and
administration expenses, including ongoing spending to upgrade
information technology systems.
Clorox said it still expects to earn $4.20 to $4.35 per
share in fiscal 2013 and that sales would rise 2 to 4 percent.
Uncertainty in some international markets, pressure from
declining foreign currencies and a challenging comparison with
strong sales growth in fiscal 2012 continue to weigh on the
company's fiscal 2013 outlook, it said.