Church & Dwight Co. Inc. (CHD), a leading consumer products company, posted third-quarter 2011 earnings of 54 cents a share, beating the Zacks Consensus Estimate by a penny. The reported earnings were up 12.5% from 48 cents earned in the prior-year quarter.
Benefiting from solid organic sales and healthy pricing, management reiterated its earnings guidance of $2.17 to $2.20 a share for fiscal 2011, reflecting an increase of 10% to 11% over 2010 results.
Church & Dwight’s top line increased 6.7% to $701 million for the third quarter of fiscal 2011, reflecting an increase of 3.7% in volume. Organic sales upped 4.5% during the quarter. The reported revenue also came ahead of the Zacks Consensus Revenue Estimate of $689 million.
The company stood by its previous organic sales guidance expecting fresh product consignments, extensive distribution gains and price increases of its products. It expects a growth of 3-4% in organic sales for fiscal year 2011.
Segment & Margin Details
Consumer Domestic net sales increased 5.2% to $506.1 million. On an organic basis, sales grew 4.3% during the quarter reflecting higher sales of ARM & HAMMER Liquid and Powder Laundry Detergents, ARM & HAMMER Cat Litter, XTRA Liquid Laundry Detergent. This was, however, partially offset by sluggish sales of OXICLEAN laundry additive.
Consumer International sales jumped 17.8% during the quarter to $128.5 million. On an organic basis, sales rose 3.9% as Australia, Mexico and Canada experienced higher sales coupled with a rise in exports in the U.S.
Specialty Products sales inched down 0.2% to $66.4 million. However, on an organic basis, sales increased 7.8%, reflecting sales growth in animal nutrition and performance product business.
Gross margin expanded 20 basis points to 44.2%, reflecting operating efficiency and cost reduction, offset by adverse product mix and increased commodity cost.
Due to increased trade promotion spending and unfavorable product mix, the company lowered its gross margin forecast for fiscal 2011. The company now expects gross margin to decline by 25-50 basis points year over year. Earlier, the company forecasted an expansion of 0-50 basis points in gross margin.
Dividend
Church & Dwight declared its 443rd regular consecutive quarterly dividend of 17 cents a share. The announced quarterly dividend will be paid on December 1, 2011 to shareholders of record as of November 14, 2011.
Other Financial Details
Church & Dwight, which faces stiff competition from Clorox Corporation (CLX), ended the quarter with cash and cash equivalents of $275 million, long-term debt of $249.7 million and shareholders’ equity of $2,085.5 million.
Church & Dwight maintains a Zacks #3 Rank, which translates into a short-term Hold rating.
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