Clorox forecasts annual profit above estimates, beats fourth-quarter profit on lower input costs
4:32 pm Thursday, August 01st, 2024
(Reuters) – Bleach maker Clorox forecast annual profit above estimates after beating fourth-quarter profit on Thursday, banking on consecutive price hikes of its home care products and easing input costs that improved margins.
The demand for company’s cleaning products such as floor cleaners and disinfectant sprays improved, as consumers prioritized shopping for daily essentials.
The volumes in company’s heath and wellness segment, a major revenue contributor, rose 2 percentage points compared to 2 percentage points drop, a year ago.
A higher trade-promotion spending and advertising, as well as merchandising, helped Clorox get an edge over lower-priced private labels that the company had lost in the last quarters due to supply chain disruptions caused by the August cyberattack.
For fiscal 2025, the company expects earnings per share between $6.55 and $6.80, above analysts’ estimate of $6.45 per share, according to LSEG data.
It earned adjusted profit of $1.82 per share in the fourth quarter, topping estimates of $1.56 per share.
Clorox’s results come at a time when peers Colgate-Palmolive and Kimberly-Clark saw volumes improve on steady demand.
Benefits from price hikes taken over the past quarters coupled with lower costs of manufacturing and logistics, as well as cost-saving initiatives and lower commodity costs, helped Clorox expand its quarterly gross margins by 380 basis points to 46.5%.
The company’s sales, however, decreased due to impacts of the divestiture of Argentina business, distribution recovery and lower consumption in household business.
The company’s sales in grilling business of its household segment decreased owing to the impact from poor weather – rainy around Memorial Day holiday and too hot in June, finance chief Kevin Jacobsen told Reuters.
“We lost over 5 share points during the cyber attack and when I look at the month of June, we’re down about 3/10 of a percent, which means we have recovered,” Jacobsen added.
The Pine-Sol maker also expects its annual net sales to be flat to down 2%, below analysts’ estimates of a 2.55% rise.
The company posted bigger-than-expected sales drop of 6% to $1.90 billion in quarter ended June 30, compared with estimates of 3.37% decline to $1.95 billion.
Shares of the company were up about 3%, after the bell.
(Reporting by Anuja Bharat Mistry in Bengaluru and Jessica DiNapoli in New York; Editing by Mohammed Safi Shamsi)
