Consumer products company Clorox Co. (CLX) on Wednesday reported a profit for the third quarter that edged up less than 1 percent, reflecting weak charcoal sales amid cold weather. Sales were also negatively impacted by unfavorable foreign currency exchange rates and missed analysts' estimates.
Looking ahead, Clorox maintained its earnings outlook for fiscal 2013, but lowered the top end of its sales guidance range. Further ahead, the company forecast fiscal 2014 earnings mostly below analysts' estimates.
Don Knauss, Chairman and CEO of Clorox said, "In addition to a challenging year-over-year comparison, the U.S. had the coldest March weather in more than 10 years, which led to double-digit volume and sales declines in our Charcoal business. In addition, declining currencies in Argentina and Venezuela also affected our sales results. Excluding the impact of these headwinds, total company sales grew 3 percent, with solid increases in most of our U.S. businesses and growth in most of our International business."
Lower charcoal volume reduced third-quarter sales by 1.5 percentage points. Sales were also impacted by nearly 1 percentage point from unfavorable foreign currency exchange rates.
Oakland, California-based Clorox operates in four segments - cleaning, lifestyle, household, and international.
Cleaning segment sales for the third quarter rose 2 percent from the prior-year period, while household sales declined 1 percent. Lifestyle segment and International sales each gained 2 percent year-over-year.
Volume for the quarter were flat with the year-ago period. Gross margin declined 20 basis points from the year-ago period to 42.1 percent. This includes a decline of 40 basis points due to margin compression in the company's International business, largely driven by high inflation and price controls in Argentina and Venezuela. In addition, lower charcoal sales contributed a decline of 30 basis points.
Clorox's third-quarter net earnings rose to $133 million from $132 million in the year-ago period, while earnings per share edged down to $1.00 from $1.01 last year on higher number of shares outstanding. On average, 17 analysts polled by Thomson Reuters expected the company to earn $1.06 per share for the quarter. Analysts' estimates typically exclude one-time items.
The latest quarter's results reflect a negative impact of $0.06 per share driven by double-digit declines in charcoal volume and sales due to unfavorable weather conditions, in addition to a negative impact of $0.05 per share from unfavorable foreign currency exchange rates.
Net sales for the quarter edged up to $1.41 billion from $1.40 billion in the previous-year quarter, primarily due to the benefit of price increases. Analysts had a consensus revenue estimate of $1.44 billion.
Looking ahead to fiscal 2013, Clorox maintained its forecast for earnings per share in a range of $4.25 to $4.35. However, the company now forecasts sales growth in a range of 3 to 4 percent, but likely toward the lower end of the range. Earlier, the company projected sales growth of 3 to 5 percent. Analysts expect the company to earn $4.34 per share on revenues of $5.69 billion.
For fiscal 2014, Clorox forecasts earnings per share of $4.55 to $4.70 on sales growth of 2 to 4 percent. Street expects the company to report earnings of $4.70 per share for the year on revenues of $5.87 billion.
In Wednesday's regular session, CLX is trading at $85.46, down $0.79 or 0.92 percent on a volume of 788,304 shares.
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