Nutranext proving to be a star for Clorox, even as its sales of probiotics take a dip

05-Feb-2019 - Last updated on 05-Feb-2019 at 17:23 GMT

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Clorox continues to ride strong results in its nutritional products brands toward a positive overall earnings statement. The contribution of its Nutranext segment offset drops in other categories, such as probiotics and charcoal products.

Clorox has been on a diversification path in the past few years. In early 2018 acquired Nutranext for $700 million, a company that has a number of nutrition product lines, including Rainbow Light, True Health, Blessed Herbs, Stop Aging Now and collagen brand Neocell. In 2016, Clorox acquired Renew Life, which markets a line of probiotic supplements. That deal was worth $290 million.

Clorox, a company built on household cleaning products and the Kingsford charcoal brand, is another example of a company that has engineered an earnings turnaround with acquisitions in the dietary supplements and nutritional products sector. Innophos, a company once focused primarily on phosphate chemical products, is another. In recent years Innophos has acquired two ingredient suppliers—Novel Ingredients and NutraGenesis—and has benefited from these acquistions in terms of its bottom line.

Nutranext leads the way

In its second quarter earnings release, Clorox reported that sales in its Lifestyle division were up 25%, and reflected a 13% pretax earnings increase. The division includes NutraNext and Renew Life as well as the Burt’s Bees personal care brand. Brands in the dressings and sauces and water filtration (Brita) segments are included as well.

“In our Lifestyle segment, we grew sales in every single business. Segment sales grew 25% in Q2, mainly reflecting the Nutranext acquisition, which added about 21 points of benefit. Integration is going well with our flagship brands recently gaining national distribution at several major retailers,” said Lisah Burhan, vice president of investor relations. Her comments were made during an earnings call with analysts, of which a full transcript is on seekingalpha.com.

Renew Life sales were down, however, driven by what Burhan called “an overall category decline.” She said Clorox plans new packaging with stronger claims and a renewed focus on ecommerce sales as a way to reverse the sales slide.

Going forward, Clorox predicted growth for the full 2019 fiscal year at 2% to 4%. Nutranext was expected to account for 3% of the overall growth. But the company will take a big hit from its LATAM operations. The devaluation of the Argentine peso will depress earnings by about 3%.