CHICAGO – Clorox Co. (CLX) on Tuesday said quarterly profit fell on charges related to the household product maker's shutdown of a Glad plastic bag factory, though earnings beat expectations.
Clorox, whose shares rose 1 percent, said it was sticking with its full-year profit outlook, despite beating expectations, because further increases in materials costs are likely. Cost-cutting measures helped the company mitigate rising raw material prices in the quarter.
"(The) recent quarter is a step in the right direction for Clorox, which is growing the top-line through niche new product activity while boosting margins through promotional efficiency and other cost savings programs," said Andrew Shore, analyst at Deutsche Bank, who rates Clorox "hold."
"However, the stock is not cheap at current levels and higher input costs and a tough competitive environment keep us on the sidelines," he wrote in a research report.
Net income dropped to $123 million, or 57 cents per share, in the fiscal first quarter ended Sept. 30, from $129 million, or 60 cents, a year earlier.
The company, which also makes its namesake bleach, Kingsford charcoal (search) and Hidden Valley (search) salad dressing, as previously announced took a $30 million pretax charge, or 9 cents a share, in the quarter, largely due to the shutdown of a Glad plant in Georgia.
Analysts expected the Oakland, Calif.-based company to earn 53 cents to 54 cents a share, with a mean target of 54 cents, according to Reuters Estimates.
Sales rose 4 percent to $1.09 billion. Volume also rose 4 percent, boosted by record shipments of disinfecting wipes and new products.
Clorox forecast earnings of 48 cents to 52 cents a share in the second quarter, excluding a transaction involving German soaps and adhesives company Henkel KGaA (search). Analysts on average forecast 51 cents a share, according to Reuters Estimates.
Last month, Henkel KGaA agreed to shed its 29 percent stake in Clorox to raise funds to pay for its purchase of Dial Corp. The deal with Clorox gives Henkel $2.1 billion in cash, ownership of some Clorox brands and a stake in a Spanish joint venture. Henkel is selling 61.4 million shares in Clorox. The deal is expected to close by Dec. 1.
The company forecast sales increasing 3 percent to 5 percent in the second quarter.
For the year, the company stood by its earnings forecast of $2.58 to $2.66 a share, with sales up 3 percent to 5 percent, excluding the Henkel deal.
Clorox shares rose 55 cents to $55.70 Tuesday on the New York Stock Exchange (search).
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