OAKLAND, Calif. (AP) – Clorox is shutting down all operations in Venezuela, citing restrictions by the government, supply disruptions and economic uncertainty.
Shares jumped 3 percent before the opening bell Monday.
The consumer products company said that for almost three years its affiliate, Corporación Clorox de Venezuela S.A., had to sell more than two-thirds of its products at prices frozen by the Venezuelan government. Over that same time span, there was a sharp rise in inflation that resulted in significantly higher costs for Clorox.
The Clorox Co. affiliate met repeatedly met with government authorities and said it had expected significant price hikes would be allowed earlier in 2014.
However, Clorox said that the price increases that were approved were "nowhere near sufficient" and that the company would be forced to continue selling products at a loss
Clorox, which makes Pine-Sol, Glad bags, wraps and containers and Kingsford charcoal, said it is now looking to sell its assets in Venezuela.
The Venezuelan economy has grown unstable since the death last year of Hugo Chavez, its longtime president.
Inflation has been raging and economists have recently begun talking about the possibility of a government default. Venezuelan President Nicolas Maduro, who has clamped down on large protests, has told foreign creditors that his government will make good on a $4.5 billion foreign debt payment due next month.
The turmoil is taking its toll on U.S. corporations, however.
American and Delta Airlines are cutting flights in the country and another consumer products company, Procter & Gamble, cut its profit outlook, citing the fluctuating currencies of Venezuela and other developing countries.
The announcement Monday by Clorox sent shares up $2.93 to $93.50 in premarket trading.
The Oakland, California company also maintained its fiscal 2015 guidance for earnings from continuing operations between $4.35 and $4.50 per share and revenue to be about flat.
Analysts polled by FactSet expect earnings of $4.42 per share.