Clorox Sees Increased Sales, Decreased Net Earnings for Second Quarter

The Clorox Company, Oakland, CA, exceeded analysts’ consensus earnings estimates for the second quarter. Results were driven primarily by continued strength in the company’s Glad and cat litter businesses, Kingsford charcoal and Armor All auto care shipments and significant progress on cost-saving initiatives, according to the company.

Net earnings for the quarter ended Dec. 31, 2001 were $51 million, compared to net earnings of $64 million a year ago. Net sales for the quarter rose 3% to $901 million, compared with $876 million in the prior-year quarter, and net volume rose 2%. Overall volume increased 4%, reflecting solid performance in all segments but was partially offset by the impact of Kmart’s financial difficulties and economic conditions in Argentina. Second-quarter sales, excluding foreign-currency effects and the fire logs business, rose 5% versus the year-ago period.

“Despite significant external events, Clorox delivered solid results in the second quarter, demonstrating that our investment in media spending to fuel growth and our margin-improvement and cost-saving initiatives are working,” said chairman and chief executive officer Craig Sullivan. “We’re also making great progress on reducing working capital with improvements in inventories, receivables and payables.”

The company also announced it has sold its Maxforce professional insecticides business to Aventis Environmental Science of Lyon, France. Terms of the transaction were not disclosed.

Household product volume in North America rose 3% and sales increased 3%. Volume and sales growth in this segment were primarily fueled by strong performance from Glad as the brand posted its highest volume increases since Clorox acquired the business in January 1999, executives said. Clorox liquid bleach, disinfecting wipes and toilet bowl cleaner each posted strong volume gains. Discontinued laundry care products and declines in a number of home care brands due to intense competitive activity partially offset growth throughout most of the segment.

In Latin America, household products increased 4% in volume and rose1% in sales. In the second quarter, shipments were largely affected by Argentina’s economic crisis. Fragranced cleaners, notably the Poett brand, continued to be a major driver of volume in Latin America, gaining share across the region, Clorox said. Demand for bleach also increased. Specialty products sale rose 5%.

For the second half of the year Mr. Sullivan noted, “We expect fiscal-year sales and volume growth in the low- to mid-single digits, which takes into consideration Kmart’s bankruptcy and economic conditions in Argentina, as well as the sale of Maxforce. We’re very encouraged by the improvements we’re making in our cost structure and expect this to continue.”