Clorox Expects Double-Digit Second Quarter Earnings

The Clorox Company, Oakland, CA, updated its earnings per share outlook for its fiscal second quarter ending Dec. 31, 2002, and confirmed its outlook for the fiscal year ending June 30, 2003. The company also announced that the first phase of “Project Delta,” a multi-year initiative to upgrade major business processes and systems, is now up and running and well on track.

For the second quarter, as previously announced, Clorox continues to expect low-single-digit volume and sales growth versus the year-ago quarter, reflecting a 2% impact from divestitures, including the sale of Jonny Cat cat litter to Oil-Dri Corporation of America, which closed on Dec. 13. The company continues to expect strong gross margin improvement driven by cost savings. Advertising spending is now expected to be significantly higher than previously anticipated, resulting in operating margins about equal to the prior-year period.

“We’re pleased that our top-line performance remains on track behind our continuing investment in advertising and brand building,” said Clorox chairman and chief executive officer Craig Sullivan. “Our emphases on driving growth, improving gross margins and cutting costs are clearly working for us.”

During the second quarter, Clorox completed a review of its businesses in Colombia and Venezuela in accordance with accounting standard No. 142 and concluded that there are currently no impairments associated with these businesses.

For the full fiscal year, Clorox continues to anticipate substantial second-half expenses associated with launching the Glad products joint venture with Procter & Gamble, a number of new product introductions and amortization of expenses associated with the phase one implementation of Project Delta. The company’s 2003 earnings estimate represents an increase of 47% to 63%.