uploads/2015/11/Segment-11.jpg

Clorox’s Largest Operating Segment: Cleaning

By

Updated

Cleaning segment overview

Clorox (CLX) operates through four strategic segments:

  1. Cleaning
  2. Household
  3. Lifestyle
  4. International

Clorox’s Cleaning segment consists of laundry, home care, and professional products that are marketed and sold in the United States. Products within this segment include laundry additives such as bleach products under the Clorox brand and Clorox 2 stain fighter and color booster.

Clorox also manufactures naturally derived products under the Green Works brand. Other home care and professional cleaning and disinfecting products include Formula 409, Tilex, Dispatch, Aplicare, and HealthLink brands.

Article continues below advertisement

Revenue

The Cleaning segment’s revenue increased 2.7% to $1.8 billion in fiscal 2015[1. year ended June 30, 2015] compared to $1.7 billion in fiscal 2014. The Cleaning segment contributed 32.3% to the total consolidated sales of Clorox, the highest among all the segments. The increase was primarily due to higher volume growth driven by gains across home care brands, including Clorox disinfecting wipes.

Operating income

Operating income of the Cleaning segment increased ~4% to $0.45 billion in fiscal 2015 compared to $0.43 billion in fiscal 2014. This was primarily due to higher sales, cost savings, and favorable commodity costs. However, these factors were partially offset by higher performance-based incentive costs and incremental demand-building investments.

Focus on professional products

Clorox plans to increase merchandising support and product innovation in order to have a competitive advantage over its peers. Clorox professional products contributed to segment volume growth, reflecting gains across HealthLink and Aplicare brands.

Clorox also provides healthcare, food services, and cleaning and maintenance solutions under Clorox Commercial Solutions. The company aims to strengthen its solutions provider brand, as it holds 5% of the company’s total net sales. Procter & Gamble (PG), Colgate-Palmolive (CL), and Kimberly-Clark (KMB) don’t provide professional cleaning solutions.

Clorox (CLX) has exposure in the PowerShares S&P 500 High Quality ETF (SPHQ), with 0.8%[2. updated as of November 19, 2015] of the total weight of the portfolio.

Advertisement

More From Market Realist