Clorox said quarterly profit rose 15 percent, topping expectations, with higher prices and strong sales of products like its Green Works cleaners outweighing the impact of increased commodity costs.
The maker of Clorox bleach and Brita water filters stood by its full-year profit forecast but lowered its sales outlook due to falling foreign currencies. But commodity and diesel costswill not rise as much as it had expected, the company said.
Clorox is closely watching consumer spending habits and expects shoppers to turn to brands they trust, such as its own, during the tough economic times, Chairman and Chief Executive Don Knauss said in a statement. His comments are counter to the view that consumers look for less expensive store-branded products during a downturn.
In North America, the company's largest market, sales rose 11 percent, and volume was up 4 percent. Burt's Bees personal care products, Green Works environmentally friendly cleaners and Glad ForceFlex trash bags were among the best-sellers. Clorox liquid bleach, Pine-Sol cleaner and regular Glad trash bags did not sell as well.
Profit rose to $128 million, or 91 cents a share, in the fiscal first quarter ended Sept. 30, from $111 million, or 76 cents a share, a year earlier. Analysts' average expectation was 84 cents per share, according to Reuters Estimates. Sales jumped 11.7 percent to $1.38 billion, topping Wall Street's average target of nearly $1.35 billion.
Volume increased 4 percent. Sales and volume both got a boost from the acquisition of the Burt's Bees product line. Clorox now expects $150 million to $170 million in higher commodity and diesel costs this year, versus its prior forecast of $180 million to $200 million.
The company stood by its August forecast calling for fiscal-year earnings of $3.60 to $3.75 a share, while analysts, on average, expected $3.68 per share.
It now looks for fiscal 2009 sales to rise 4 percent to 6 percent, down from a prior forecast of 6 percent to 8 percent, due to currency changes. About 10 percent of Clorox's sales come from Canada, Australia, New Zealand, Mexico and Chile, which have experienced currency devaluation of more than 20 percent over the last two months, the company said.
Clorox expects the biggest impact from foreign currencies on second-quarter sales, while the anticipated benefits from lower commodity costs and cost-cutting should be felt in the second half of the fiscal year.