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Church & Dwight Hammers Estimates

The baking soda giant posts a solid fourth quarter.
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Church & Dwight


beat fourth-quarter targets as laundry detergent sales drove a 6.5% revenue gain.

The Princeton, N.J., baking soda giant made $16 million, or 25 cents a share, for the quarter ended Dec. 31, up from the year-ago $12 million, or 18 cents a share. The latest quarter included charges of more than $17 million related to the shutdown of a small plant in Europe, restructuring activity at several other locations, and hurricane-related costs; last year's results included a $14.9 million charge related to the early redemption of long-term debt. Analysts surveyed by Thomson First Call were looking for a 22-cent-a-share profit.

Sales rose to $431 million from $405 million a year earlier, beating the $421 million Thomson estimate.

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At the product line level, fourth-quarter household products sales increased 7% due to strong growth for liquid laundry detergent and pet products; and personal care sales increased 2% due to higher sales for condoms and diagnostic kits, partially offset by lower sales for toothpaste and antiperspirants. Consumer international sales were 9% higher, led by growth in Canada, Mexico and Brazil. Specialty products sales increased 8% due to growth in animal nutrition and specialty chemicals.

At the brand level, sales of Arm & Hammer and Xtra liquid laundry detergent, Arm & Hammer Super Scoop cat litter, Trojan condoms and First Response pregnancy kits were all substantially higher than last year.

"We are satisfied with this year's earnings growth which was achieved in a tough cost environment," CEO James Craigie said. "Although our gross margin declined in 2005 after several years of steady growth, with the aggressive pricing and other actions recently taken, we expect to be able to achieve significant margin improvement in 2006."

Craigie said the company's objective is to generate average annual earnings-per-share growth of 10%-12% a year on an organic basis.

"For this year, based on the timing of the price increases and new product marketing initiatives, we do not expect to show any significant earnings growth until the second half of 2006," he said. "But we still foresee a strong year overall, and feel comfortable with an earnings per share goal of $1.93 per share, which is equivalent to $2.01 per share before the stock option expense, or 10% above last year."

Analysts were looking for $2.04 a share.