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Clorox has 'solid' Q4

OAKLAND, Calif. — Clorox sales results for the fourth quarter ended June 30 increased slightly, but despite being lower than anticipated, the company is ready to take on competitive pressures and increase its merchandising activity.

Clorox reported earnings of $184 million for the quarter, or $1.38 diluted earnings per share, compared with $174 million in the year-ago quarter, or $1.32 diluted earnings per share. Current-quarter results reflect the benefit of strong cost savings and price increases, partially offset by higher manufacturing and logistics costs, including the impact of inflationary pressures, and unfavorable foreign currency exchange rates.

Volume for the fourth quarter decreased 3%, primarily driven by declines in the company's home care, charcoal and international businesses. Sales were up slightly, reflecting the benefit of price increases, favorable product mix and lower trade spending, largely offset by lower volume and unfavorable foreign currency exchange rates. Excluding the impact of foreign currency declines, sales grew nearly 1.5%.

"Clorox people around the world delivered solid results this fiscal year," said chairman and CEO Don Knauss. "We grew sales in all four segments behind product innovation across multiple brands. In Q4 we delivered strong margin expansion and diluted EPS growth from continuing operations of 5%. Excluding the impact of foreign currencies, sales grew nearly 1.5% in the quarter. While sales results came in slightly lower than anticipated, I feel good about our plans to address the competitive pressures we're facing, including increased merchandising activity as well as product innovation scheduled to launch in fiscal year 2014."

The company's cleaning segment, made up of laundry, home care, professional products, experiences a 4% volume decrease, a 1% sales decrease and a 7% pretax earnings increase. Volume declines for the segment were driven primarily by lower shipments of Clorox disinfecting wipes due to increased competitive activity and the resulting decrease in merchandising support. Laundry volume was flat reflecting increased shipments of Clorox bleach, driven by strong category growth following last year's conversion to a new, concentrated formula, offset by lower shipments of Clorox 2 due to declines in market share. The professional products business continued to deliver strong volume growth primarily driven by record shipments of cleaning products. The variance between volume and sales reflects the benefits of favorable product mix and price increases implemented earlier this fiscal year behind innovation in spray cleaners.

The company's household segment, made up of bags and wraps, charcoal, cat litter, experienced a 1% volume decrease, 2% sales increase and 6% pretax earnings increase. The segment's volume decrease was driven primarily by declines in charcoal, due to continued cold weather in the early part of the quarter, with significantly improving trends in June from better weather and Kingsford market share gains. Cat litter volume grew behind new products and increased merchandising support. Glad volume was also up, largely due to continued strong growth and innovation in premium trash bags. The variance between volume and sales was due to the impact of earlier price increases on cat litter and charcoal products.

The company's lifestyle segment, made up of dressings and sauces, water filtration, natural personal care, experienced flat volume, a 2% sales increase and a 5% pretax earnings decrease. Food business volume was up, driven primarily by Hidden Valley base business growth and higher shipments of new Hidden Valley pasta salad kits. Volume declined in water filtration primarily due to increased competitive activity, earlier price increases and a comparison to strong volume in the year-ago quarter behind the pipeline build of Brita Bottle. Burt's Bees volume was flat due to a comparison to double-digit growth in the year-ago quarter behind the pipeline build of güd products. Retail consumption for Burt's Bees products was up double-digits in the quarter. Segment sales outpaced volume primarily driven by the benefit of prior-year price increases on Brita products.

The company's international segment, which includes all countries outside of the U.S., experienced a 6% volume decrease, a 1% sales decrease and a 8% pretax earnings decrease. Volume decreased primarily due to the exit from nonstrategic export businesses, and declines in Canada and Argentina. Segment sales decreased due to lower volume and declines in foreign currencies, partially offset by the benefit of favorable mix and price increases.