Helped by swine flu, Clorox 1Q profit rises 23 pct

Higher prices and germ-wary shoppers who rushed to stock up on disinfectants helped The Clorox Co. earn 23 percent more in the first quarter this year than last, the company said Monday.

"The upside related to the H1N1 flu was well above our forecast given the rapid spread of the virus," said Larry Peiros, chief operating officer of Clorox North America.

The flu pandemic drove shipments of Clorox disinfectant wipes to an all-time record, said Jefferies analyst Douglas M. Lane, who rates shares of Clorox "Buy."

But executives said the company's commodity costs will be higher than expected later this year because the price of oil is rising.

"Commodity costs remain unpredictable, and the consumer still remains under pressure," Chief Executive Don Knauss said on a conference call with analysts.

Less expensive private-label brands are still providing tough competition for Clorox, especially in trash bags. Clorox previously raised prices on trash bags because it was paying more for plastic resin.

Clorox doesn't plan to roll back its prices to keep consumers from trading down to cheaper products to save money amid layoffs and tighter credit. Instead, the company plans to use marketing to maintain market share. For example, in the laundry business, Clorox is focusing on the idea that "detergent alone is not enough," the company said.

The maker of Brita water filters and Glad bags said its profit rose to $157 million, or $1.11 per share, compared with $128 million, or 90 cents per share, a year earlier.

The company benefited from higher prices, especially overseas, which boosted its gross margin.

For the quarter that ended Sept. 30, its revenue declined less than 1 percent to $1.37 billion because of unfavorable exchange rates and weak sales of Glad trash bags. Clorox decided last fiscal year it would stop making store-brand food bags.

Analysts polled by Thomson Reuters expected earnings of 95 cents and sales of $1.34 billion.

For the full fiscal year, Clorox raised its profit forecast to between $4.05 per share and $4.20 per share, from a range of $4 to $4.15. It expects sales to rise 1 percent to 2 percent and the weaker dollar to offset a rise in marketing and commodity costs. U.S. companies that record business overseas benefit when the dollar weakens because revenue made in local currencies is converted into more dollars.

Analysts expect earnings per share of $4.18 and sales of $5.57 billion.

Shares of Clorox declined 5 cents to $59.18.