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New Products Help Clorox Profit Climb 24%

August 06, 2004|From Bloomberg News

Clorox Co., the largest U.S. household-bleach maker, said fiscal fourth-quarter profit jumped 24%, helped by sales of newer cleaning products and lower expenses.

Net income rose to $185 million, or 86 cents, from $149 million, or 68 cents, a year earlier, the Oakland-based company said. Sales in the period ended June 30 increased 7.9% to $1.24 billion, the fastest pace in almost five years.

Sales got a boost from advertising for the new ToiletWand brush with a disposable head, which was introduced in April, and bleach pen spot remover. Chief Executive Gerald Johnston is adding products while trimming selling and administrative costs amid competition from companies such as Procter & Gamble Co. and retailers that make lower-price versions of cleaning items.

"A change in the product development process initiated in late 2002 is bearing fruit," Lauren Lieberman, an analyst at Credit Suisse First Boston in New York, wrote in a report.

Shares of Clorox, which also makes Hidden Valley salad dressings, rose 67 cents to $50.37 on the New York Stock Exchange.

Excluding a 3-cent benefit after certain items, Clorox would have earned 83 cents a share. On that basis, which isn't in accord with generally accepted accounting principles, profit matched the average estimate of analysts surveyed by Thomson First Call. The company in June said profit would rise to at least 82 cents a share.

Volume, or the number of units sold, rose 6%, the company said. Gains were driven by demand for Clorox disinfecting wipes and Scoop Away cat litter and record shipments of Kingsford charcoal.

Selling and administrative costs fell to 11% of sales from 11.7% a year earlier. Clorox also trimmed advertising and research and development costs as a percentage of revenue.

Price increases prompted by rising materials costs on products including cat litter and Glad trash bags helped widen gross margin as a percentage of sales to 46.5% from 45.3%.

Profit in the fiscal first quarter is still expected to fall to 53 cents to 55 cents a share, Clorox said. The forecast, given in May, includes costs of 9 cents for restructuring the U.S.' Glad unit and spending to support new products. Net income was 60 cents in the year-earlier period.

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