Saudi buy boosts Clorox sales

DUBAI: A joint venture acquisition in Saudi Arabia last year helped to buoy earnings at global cleaning products giant Clorox.
Still, overall sales remained flat in its third fiscal quarter, it said.
The company increased its investment in each of the two entities comprising its joint venture in the Kingdom last July.
Clorox forecast full-year earnings below estimates and expected a drop in gross margins, blaming higher manufacturing, commodity and logistics costs.
Consumer product makers are battling higher prices for commodities, including pulp, resin and petrochemicals, as well as supply disruptions due to transportation bottlenecks caused by the pandemic. Some industries are also facing labor shortages.
Clorox, which uses pulp and petrochemicals in its products such as wipes and bleaches, said rising raw material costs coupled with higher freight and manufacturing expenses, resulted in the first contraction in its quarterly gross margins in 10 quarters.
While rivals Procter & Gamble and Unilever are raising prices, Clorox did not disclose plans to hike prices to counter the higher costs.
Clorox reported gross margins of 45.5 percent for fiscal 2020, boosted by feverish demand during the pandemic and a reduction in several product lines to focus on improving capacities for its wipes and bleaches.
Signs are emerging, however, that people are cutting back on using surface cleaners and other disinfectant products, as vaccinations gather pace.
Clorox said it shipped fewer shipments of cleaning and disinfecting products to retail and professional customers in the third quarter, when compared to the same period a year earlier.
Supply constraints for some key products and tough comparison to last year led to flat sales growth in the quarter, at $1.78 billion. Adjusted earnings per share came in at $1.62, above the average analyst estimate of $1.48, according to Refinitiv data.
For the full year, Clorox expects adjusted profit of $7.45 to $7.65 per share.