(Church & Dwight story updated with executives' insight.)
NEW YORK (TheStreet) -- Church & Dwight (CHD) - Get Report executives said during their second-quarter earnings conference call that they are currently "aggressively" looking for new, smart properties to acquire while continuing to feel "very" confident about their long-term organic target growth rate of 3% to 4%.
The company said it would use its cash to buy the properties that are top share brands. Church & Dwight's CEO James Craigie said he thinks that the asset market is loosening up and that there will be an increase in M&A activity over the next six to twelve months.
The executives also mentioned during the conference call that they've seen a stabilization in price deflation and believe that deep price cuts are no longer driving volume and category growth. They said that therefore by 2011 retailers and manufacturers are likely to adjust prices higher. Furthermore, key commodity input prices like those for resins, paper and laundry detergent ingredients should abate in the second half of the year, they said.
Church & Dwight said it took a hit during the first-half of the year as the company held back on discounting prices, even as competitors lowered theirs due to concerns about starting a price war. But with new distribution deals and products in place, they expect to be fully competitive in the second-half of the year. The company expects its laundry business will do well in the back half of the year after "a shot" in the first half.
Church & Dwight has reiterated its 2010 earnings guidance of $3.93 to $4, an increase of 13% to15% excluding items after reporting better-than-expected second-quarter earnings.
The company also said that second-half marketing spending is projected to be significantly higher than the first half of 2010. On average, analysts are expecting full-year earnings of $3.98 a share.
Church & Dwight has reported second-quarter net income of $74.3 million or $1.03 a share, compared with last year's reported net income of $58.2 million or 81 cents a share.
Net sales for the second quarter increased 2.9% to $640.9 million, while organic sales grew 3.7%.
The Wall Street consensus estimate for the quarter was 95 cents on revenue of $650.62 million.
The company said that its total consumer business delivered about 7% unit growth and unit share increased on five of its eight "power brands" during the quarter."Our new product launches, such as Arm & Hammer Power Gel Laundry Detergent, Trojan Fire and Ice Condoms and Arm & Hammer Double Duty Cat Litter, are off to a great start," the company said in a press release.
On August 4, Church & Dwight declared a 21.4% increase for its regular quarterly dividend, from 14 cents to 17 cents a share. That's equivalent to an annual dividend of 68 cents a share. Church & Dwight stock has been tumbling with the broader equities, down 4.1% to $62.87.
-- Reported by Andrea Tse in New York
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