Clorox Outlines New Strategy

Household cleaning products maker Clorox Co. said Thursday it will look to expand its market share internationally in fiscal 2008, and may sell any businesses with less than double-digit annual profit growth potential.

The statements were made during the company’s analyst day in New York. Clorox also raised its quarterly dividend by 29 percent, reauthorized a stock buyback plan for up to $750 million shares, and told Wall Street it no longer will issue quarterly sales and income guidance.

Clorox executives said economic profit will be the “key measure” the company uses to drive enhanced performance, and will restructure its business units accordingly to see where the most economic value is being generated. Economic profit is defined as the income a company generates over and above the cost of paying for the assets used to run its business.

“We will continue to review our portfolio on an ongoing basis, and businesses with less than double-digit annual economic profit growth potential may be candidates for divestiture,” said Chairman and CEO Don Knauss.

Clorox said it plans to grow internationally in its laundry, home care, bags and wraps and auto-care product segments, especially in the Americas, Australia and New Zealand. The company also will increase growth by developing existing brands and making acquisitions.

Clorox forecast fiscal 2008 profit of $3.44 to $3.61 per share, or between $3.52 and $3.67 per share, excluding charges to consolidate parts of its home-care products and manufacturing network. The company warned commodity costs will pressure earnings and said it sees further inflationary pressure in manufacturing, but expects these issues will be more than offset by cost saving efforts.

Analysts polled by Thomson Financial are looking for slightly higher adjusted profit of $3.68 per share.

Clorox said it is targeting annual sales growth between 3 percent and 5 percent, excluding acquisitions and expansion. The company lifted its quarterly cash dividend to 40 cents per share from 31 cents, payable Aug. 15 to shareholders of record as of July 27.

After being halted on the news, shares resumed trading, and rose 43 cent to $67.29 in morning trading.