Clorox Raises Outlook for Fiscal 2002

Clorox Co. on Friday said its fiscal second quarter and full year 2002 earnings would be better than expected due to stronger sales in several businesses, the latest upbeat outlook from a consumer products company.

But Clorox also warned that third-quarter profits would fall short of Wall Street forecasts due to the timing of some cost savings and expenses related to a new product launch. The entire consumer products sector rose earlier this week after Clorox rival Procter & Gamble Co. said sales gains would help its quarterly earnings beat analysts’ estimates.

The overall Clorox outlook is another indication that consumer products companies, after struggling for almost two years with sluggish growth in sales and earnings, are now benefiting from cost-cutting efforts, falling raw materials prices, and increased marketing aimed at boosting sales, analysts said.

“These guys are moving back toward their trends after a very difficult 2000 and early part of 2001,” said Ann Gillin Lefever, consumer products analyst at Lehman Brothers, referring to the entire sector.

Second-quarter shipments and sales are expected to increase 3-4%, Clorox said.

“For the past 12 months, we’ve been especially focused on driving positive top-line (sales) results, and we’re encouraged by the favorable trends we’ve seen now over four consecutive quarters,” said Craig Sullivan, chairman and chief executive officer.

Clorox forecast third-quarter earnings of 40 cents to 43 cents a share, down from 45 cents a year earlier, when the company enjoyed a significant decline in its tax rate. Savings from lower packaging costs and other factors will be more pronounced in the fourth quarter, while expenses from a new product launch will be felt more in the third quarter, a Clorox spokeswoman said.

Analysts had expected earnings of 43 cents to 51 cents a share in the third quarter, with a consensus estimate of 48 cents, according to First Call.