Clorox Announces Exit From Venezuela and Confirms FY15 Outlook for Sales and EPS From Continuing Operations
- Clorox: Clorox Announces Exit From Venezuela and Confirms FY15 Outlook for Sales and EPS From Continuing Operations
OAKLAND, Calif., Sept. 22, 2014 – The Clorox Company (NYSE: CLX) today reported its affiliate Corporación Clorox de Venezuela S.A. (Clorox Venezuela) is no longer viable. As a result, Clorox Venezuela is discontinuing its operations, effective immediately, and is seeking to sell its assets.
“This is a very difficult situation for our company,” said Chairman and CEO Don Knauss. “We are extremely proud of the men and women who did their very best to operate our business in the face of significant economic challenges. We are working to support them through this transition.”
For nearly three years, Clorox Venezuela was required to sell more than two-thirds of its products at prices frozen by the Venezuelan government. During this same period, Clorox Venezuela experienced cumulative triple-digit inflation resulting in massive increases in Clorox Venezuela’s input costs, including packaging, raw materials, transportation and wages. As a result, Clorox Venezuela had been selling its products at a loss, causing ongoing operating losses. Clorox Venezuela repeatedly met with government authorities to help them understand the rapidly declining state of the business, including the need for immediate, significant and ongoing price increases and other critical remedial actions to address these adverse impacts. Based on their representations, Clorox Venezuela had expected significant price increases would be forthcoming much earlier this year. However, price increases subsequently approved by the government were nowhere near sufficient and would have caused Clorox Venezuela to continue operating at a significant loss.
While Clorox Venezuela would have preferred to maintain its business in Venezuela and continue supplying its products to the Venezuelans who use them every day, given the operating restrictions imposed by the Venezuelan government, considerable economic uncertainty, continual supply disruptions, and without significant and ongoing price increases as well as other remedial actions, Clorox Venezuela anticipated considerable operating losses would continue into the foreseeable future. As a result, the business is no longer viable and, therefore, Clorox Venezuela has been forced to discontinue its operations.
This announcement relates only to the Clorox Venezuela business; The Clorox Company’s other international businesses are not impacted.
Last night (September 18th, 2014), Clorox (CLX) announced that CEO Donald Knauss would step down and be replaced by COO Benno Dorer. B. Riley’s Linda Bolton Weiser doesn’t expect any major changes other than a possible exit from Venezuela. She explains: Clorox After the close on 9/18, CLX announced insider Benno Dorer, 50, will become CEO effective 11/20
TDS: Did Donald Knauss not want to play that infame game against Venezuela? Did he get fired for that?
