UPDATE 2-Church & Dwight Q3 tops market, ups FY profit view

* Q3 adj EPS $0.86 vs est $0.83 * Q3 sales $646.2 mln vs est $642.3 mln * Raises FY09 EPS view to $3.40-$3.43 from $3.35-$3.40

* Shares down 2 pct (Recasts; adds conference call details, analysts' comments, share movement)

By Viraj Nair

BANGALORE, Nov 3 (Reuters) - Church & Dwight Co Inc (CHD.N) reported better-than-expected quarterly results, helped by better pricing and cost cuts, and the company's raised 2009 profit outlook was in line with market estimates.

Shares of the Princeton, New Jersey-based company were down 2 percent at $57.36 Tuesday afternoon on the New York Stock Exchange.

"I think the shares might be down because the guidance that they offered matched what external estimates already are," BMO Capital Markets analyst Connie Maneaty said by phone.

The company, which lifted its 2009 profit outlook for the third time this year, expects a earnings of $3.40 to $3.43 per share, excluding restructuring and litigation charges, while analysts on average were expecting $3.43 a share.

On a conference call with analysts, the household and personal-care products maker, which has historically sought acquisitions, said it is actively eyeing takeover opportunities.

"As the balance sheet gets to the point where it can easily accommodate another acquisition, that's what they hope to make," analyst Maneaty said.

There will be acquisition opportunities in the consumer packaged goods industry in 2010 and the company could also add to its eight core brands, Church & Dwight said.

The company, which makes Trojan condoms, Arm & Hammer baking soda and SpinBrush battery-powered toothbrushes, said it began production at its newly opened laundry detergent manufacturing plant and distribution center in York County, Pennsylvania ahead of schedule in the third quarter.

The new facility is expected to be a significant contributor to gross margin expansion in 2010, Church & Dwight said.

GROSS MARGIN EXPANSION

Gross margin increased to 44.1 percent in the third quarter, compared with 39.8 percent last year, due to lower commodity costs, better pricing and the benefits of cost reduction programs.

"Much higher than anticipated gross margin was the primary source of upside, much of which was spent back on higher-than-anticipated advertising," J.P. Morgan analyst John Faucher wrote in a note to clients.

Gross margin expansion and marketing spending are expected to be strong in the fourth quarter, while foreign exchange will also be slightly favorable, the company said.

Excluding a favorable legal settlement and restructuring charge, Church & Dwight earned 86 cents per share in the third quarter.

Analysts on average expected 83 cents a share, before items, according to Thomson Reuters I/B/E/S.

Net sales rose 2 percent to $646.2 million, surpassing Wall Street expectations of $642.3 million. (Reporting by Viraj Nair in Bangalore; Editing by Gopakumar Warrier, Anne Pallivathuckal)