Clorox Reports Third-Quarter Results

The Clorox Company today announced earnings before special charges of $109 million, or 45 cents per diluted share, for its fiscal third quarter ended March 31, 2001. This compares with earnings of $114 million, or 48 cents per diluted share, in the prior-year quarter.

Volume growth in cat litter, auto care, international and water filtration was more than offset by declines in laundry additives and home care, and overall volumes for the quarter decreased 1 percent compared with the prior-year quarter. Sales for the quarter decreased by 4% to $989 million, compared with $1.03 billion in the prior-year quarter. The variance between volume and sales was primarily due to foreign currency weakness, higher trade-promotion spending and a less favorable mix of products and sizes. As expected, the company’s improved ability to utilize foreign tax credits contributed to a decline in Clorox’s tax rate and helped the quarter’s earnings. During the quarter, the company took $46 million of the $200 million in special charges previously announced for inventory and asset write-downs and for projects related to improving margins and asset utilization.

“Some of the trends we saw emerging this quarter, for example in our cat litter and Brita businesses, are encouraging,” said Chairman and CEO Craig Sullivan. “We’re continuing our focus on strengthening core businesses and accelerating top-line growth. To return overall volumes and market-share growth to acceptable levels, we’ve stepped up our investment in marketing and advertising and, where needed, we’re taking actions to ensure we have the right price-value equation on our brands.”

A summary of key results by business segment follows. Unless otherwise noted, comparisons are with the third quarter of fiscal 2000.

U.S. Household Products and Canada:

• 5% decline in volume

• 5% decline in sales

• 2% decline in pre-tax earnings before special charges

Category softness in color-safe bleaches and home dry-cleaning products as well as competitive activity and category declines in disinfecting sprays contributed to volume declines in this segment. On the positive side, the U.S. conversion to Ultra Clorox liquid bleach, which was completed this quarter with the East Coast rollout, contributed to four consecutive quarters of market share gains. The Brita water-filtration business recorded strong volume growth for the quarter, driven by increased demand for Brita’s faucet-mount filter systems, the Brita Fill & Go sports bottle introduced a year ago, and for replacement filters.

U.S. Specialty Products

• 1% growth in volume

• 4% decline in sales

• 16% decline in pre-tax earnings before special charges

Modest overall volume growth in this segment reflected healthy gains in the cat litter and auto care businesses, which were offset by softness in dressings and sauces and, to a lesser extent, bags and wraps. Higher raw material and energy-related costs and increased advertising and marketing spending impacted segment profitability.

Volume in the cat litter business was up significantly. The company’s repositioning of Scoop Away Clean cat litter delivered record volume for the brand. Volume for Fresh Step Crystals silica-gel-based cat litter, introduced in June 2000, benefited from increased distribution and consumption.

In the auto appearance business, strong initial results from Armor All protectant and cleaning wipes, launched in December 2000, more than offset continuing declines in the auto performance category.

International

• 5% growth in volume

• 4% decline in sales

• 4% growth in pre-tax earnings before special charges

In Latin America, Bon Bril cleaning utensils and the recent launch of Poett and other fragranced cleaners in Argentina, Chile, Mexico, Panama and Venezuela contributed to third quarter volume gains. Sales in this segment would have posted a 4 percent gain had it not been for the impact of foreign currency weakness in Australia, Korea, New Zealand and several Latin America countries. International segment profitability reflects the company’s continuing efforts to improve operating margins.

Church & Dwight Has Strong First Quarter

Consumer and specialty products maker Church & Dwight Co.posted stronger first-quarter earnings and reiterated its goal to deliver a solid increase in earnings for the full year.

The Princeton, New Jersey-based company, which makes Arm & Hammer brand products, said it earned $12.1 million in net income, or 30 cents per diluted share, compared with $11.7 million, or 29 cents per share, a year ago.

Church & Dwight said it expected to earn $1.28 to $1.30 before unusual items for the full year, a range that covers analysts’ consensus estimate for $1.29 per share as calculated by research firm Thomson Financial/First Call.

The 2001 first-quarter results included plant and warehouse shutdown costs totaling $1.4 million related to the start-up of a joint venture, Church & Dwight said. Last year’s first-quarter results included a deferred compensation gain of $2.1 million. Excluding the unusual items in both years, the company earned 32 cents per share in the first quarter 2001 vs. 26 cents per share in the year-ago period. Net sales rose to $256.5 million from $193.9 million.