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.


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 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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