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The Clorox Company Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: February 6, 2012 05:48PM

The Clorox Company (CLX) filed Quarterly Report for the period ended 2011-12-31. Clorox Co. has a market cap of $9.21 billion; its shares were traded at around $69.86 with a P/E ratio of 16.75 and P/S ratio of 1.76. The dividend yield of Clorox Co. stocks is 3.44%. Clorox Co. had an annual average earning growth of 9.5% over the past 10 years. GuruFocus rated Clorox Co. the business predictability rank of 3.5-star.



Highlight of Business Operations:

Other income, net, was $6 and $12 in the current periods, respectively, and $12 and $13 in the prior periods, respectively. Other income, net, in the current quarter included $4 of equity in earnings of unconsolidated affiliates and $2 of income from transition services related to the Company’s sale of its Auto Businesses. Other income, net, in the prior quarter included gains on asset sales.

The effective tax rate on earnings (losses) from continuing operations was 32.4% and 31.3% for the current periods, respectively, and (45.0)% and 125.9% for the prior periods, respectively. The tax rates for the current periods include tax benefits associated with foreign earnings and from favorable tax settlements. The substantially different tax rates for the prior periods resulted from the non-deductible non-cash goodwill impairment charge of $258 related to the Burt’s Bees reporting unit as there was no substantial tax benefit associated with this non-cash charge.

Volume decline of 1% in the current six month period was primarily driven by lower shipments of Clorox® laundry additives due to price increases, partially offset by higher shipments of Clorox® disinfecting bathroom cleaner and higher shipments in the Away From Home business. The variance between net sales growth and volume decline was primarily due to the benefit of price increases (approximately 360 basis points), partially offset by unfavorable mix (approximately 170 basis points). The increase in earnings from continuing operations before income taxes was primarily due to $13 of cost savings due to various manufacturing efficiencies, $8 of lower advertising and sales promotion expenses and $6 of higher net sales. These increases were partially offset by $20 of higher commodity costs, primarily resin, and $7 of higher manufacturing and logistics costs.

Volume growth of 3% in the current six month period was primarily driven by higher shipments of Fresh Step® and Scoop Away® cat litter, driven by new product innovation and higher shipments of Kingsford® charcoal due to higher merchandising partially offset by lower shipments of Glad® base trash bags due to price increases. Net sales growth outpaced volume growth primarily due to the benefit of price increases (approximately 460 basis points), partially offset by unfavorable mix (approximately 160 basis points). The decrease in earnings from continuing operations before income taxes was primarily due to $28 of higher commodity costs, primarily resin, and $14 of higher manufacturing and logistics costs. These decreases were partially offset by $26 of higher sales and $16 of cost savings due to various manufacturing efficiencies.

Volume growth of 1% in the current six month period was primarily due to higher shipments in Argentina and distribution gains in a number of small emerging countries in Asia and the Middle East. These increases were partially offset by lower shipments in the nonstrategic export business and Venezuela, and lower shipments of Glad® products in Canada due to category softness. Net sales growth outpaced volume growth primarily due to the benefit of price increases (approximately 620 basis points), partially offset by unfavorable mix (approximately 240 basis points) and trade promotion spending (approximately 80 basis points). The decrease in earnings from continuing operations before income taxes was primarily due to $18 of higher manufacturing and logistics costs, primarily related to inflationary pressures in Argentina and Venezuela; $12 of higher commodity costs, primarily resin; $11 of higher selling and administrative expenses associated with investments in information systems infrastructure and inflationary pressures in Argentina and Venezuela; and $7 of unfavorable mix. These decreases were partially offset by $34 from the benefit of price increases and $7 of cost savings, primarily related to various manufacturing efficiencies.

Read the The complete Report



Stocks Discussed: CLX,
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