Church & Dwight Co., Inc. announced that full year 2011 net sales increased 6.2% to $2,749 million from $2,589 million in 2010. Organic sales growth for 2011 was 4.1%, driven by volume growth of 3.9% and the 0.2% positive effect of price. Organic sales exclude the impact of foreign exchange rate changes, acquisitions, divestitures, sales in anticipation of an information system upgrade, a discontinued product line, a change in shipping terms, and a change in the fiscal calendar for three foreign subsidiaries.
Of the full year 2011 results, James R. Craigie, chairman and CEO, commented, “We are proud of the business results we accomplished in 2011. Despite weak consumer demand and intense price competition, we delivered 4% organic sales growth and 12% adjusted EPS growth. In addition, we exited the year with momentum and saw an improvement in organic growth each quarter this year. We successfully implemented an information systems upgrade in Canada in October 2011 and in the United States on January 1, 2012 to provide us with better visibility to operating data and improved analytical capabilities. We significantly increased our dividend to return value to shareholders.”
The company’s reported net sales for the fourth quarter increased 11.3% to $731.1 million, and organic sales increased 7.1%, driven by volume growth of 5.4% and the 1.7% positive effect of price.
Church & Dwight’s consumer domestic division’s net sales were $519.6 million, a $47 million increase or 10% above the prior year fourth quarter sales. Fourth quarter organic sales increased by 7.4%, largely driven by higher sales of Arm & Hammer detergent products, as well as Arm & Hammer Spinbrush battery powered toothbrushes. These increases were partially offset by lower sales of OxiClean laundry additives and Arm & Hammer dental care toothpaste. Volume growth contributed approximately 6.6% to organic sales and positive price contributed 0.8%. The organic sales results exclude an estimated 1.7% benefit from a timing shift in customer orders from the first quarter of 2012 to the fourth quarter of 2011 in anticipation of the January 2012 U.S. information system upgrade and a 0.9% benefit from acquisitions. The shift in customer orders had an insignificant effect on earnings due to reinvestment in marketing and trade spending to support the brands.
For the consumer international division, net sales were $145 million, a $24.8 million increase or 20.7% above the prior year fourth quarter sales. Organic sales increased by 6.2% primarily due to increased sales in Canada, Australia and Mexico, as well as increased U.S. exports. Volume growth contributed approximately 4.1% to organic sales and positive price contributed 2.1%. The organic sales results exclude a one-time 11.9% favorable benefit from a change in fiscal calendar from November 30 to December 31 in the UK, France and Australia concurrent with the systems upgrade in the US; exclude a 4.1% benefit from acquisitions; include 1.2% from a timing shift in customer orders from the fourth quarter to the third quarter in anticipation of the October information system upgrade in Canada; and exclude the 0.3% unfavorable effect of foreign exchange rate changes. The change in fiscal calendar generated minimal incremental operating profits due to reinvestment in marketing to support the business.
In regard to the company’s outlook for 2012, Craigie said, “We continue to expect a difficult and challenging economic environment in 2012. Consumer spending and category growth is expected to remain weak due to high unemployment and consumer uncertainty. Commodity prices are expected to continue to increase in 2012 and competition will remain fierce. We believe we are in an excellent position to continue to deliver value to our shareholders with our balanced portfolio of value and premium products, aggressive cost cutting and tight management of overhead costs.
“We expect reported and organic sales growth of 3–4% in 2012 while increasing gross margin by 25–50 basis points. Regarding mix, we continue to expect our value products, particularly in the laundry category, to benefit from the weak economy and deliver strong organic growth. We plan to maintain our marketing support in 2012 focused behind our power brands and the launch of our innovative new value and premium products, which will continue to drive share gains.
“As a result of these factors, we are forecasting earnings per share to be in the range of $2.41–2.43, which is an increase of 14–15% on a reported basis, and 9–10%, excluding the deferred tax valuation allowance charge of $0.09 in 2011,” Craigie concluded.