The Procter & Gamble Company (PG), Kimberly Clark Corp (KMB), The Clorox Co (CLX): Three FMCG Companies Favoring Expansion and Cost Restructuring

Cash distribution through timely-dividends, supported by growing household segment

The Clorox Co (NYSE:CLX)‘s household segment contributes about 29% to the company’s revenue. Sales of its household segment decreased 1% in the third quarter of 2013, quarter over quarter. This was majorly due to the 20% decline in charcoal sales due to bad weather conditions in countries like the U.S. and the U.K., but is expected to pick up. To boost sales, The Clorox Co (NYSE:CLX) has spent $132 million on advertising and research and development, which is 5% higher from the previous quarter.

The rise in marketing spending is the result of new product launches, like smoke-flavored Kingsford charcoal and a line of Hidden Valley sandwich spreads, in the current fiscal year. Therefore, it is estimated that this segment will grow 11% to $459 million in the fourth quarter compared to $413 million in the third quarter of 2013.

The Clorox Co (NYSE:CLX) reported $333 million of cash flow in the third quarter of 2013. Its year-to-date cash flow has reached $462 million. Looking at the increased cash flow, it has planned to distribute dividends of $0.71 per share, up 11% from $0.64 paid last year, bringing the company’s annualized dividend to $2.84 per share. The company has almost doubled its annual dividend from $1.20 to $2.56 per share in the past six years. It has also surpassed the highest stockholder returns given by any S&P 500 company and peer group companies in the past four years. The Clorox Co (NYSE:CLX) has a long-time record of paying timely dividends to its shareholders since 1977.

Conclusion

The Procter & Gamble Company (NYSE:PG)’s strategy to expand its business in emerging markets, with innovation in products, will help it sustain competition, and protect market share.

Kimberly Clark Corp (NYSE:KMB) posted great results due to sales in emerging markets and its FORCE program. The same format can be expected for the current fiscal year.

The Clorox Co (NYSE:CLX) is expected to do overall moderate business. But, considering the company’s focus on innovation and cost management, investors can expect better top-line growth in the coming years.

Considering the potential for long-term growth, I suggest buying all three companies.

The article 3 FMCG Companies Favoring Expansion and Cost Restructuring originally appeared on Fool.com and is written by Shweta Dubey.

Shweta Dubey has no position in any stocks mentioned. The Motley Fool recommends Kimberly-Clark and Procter & Gamble.
Shweta is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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