Church & Dwight (NYSE:CHD) reports organic sales growth of 4.5% in Q2 on top of the strong 8.4% comp from a year ago. The company says it grew consumption in 13 of the 16 categories in which it competes. Personal care categories benefited from increased consumer mobility. Organic sales were up 2.8% domestically and rose 10.4% internationally.
Gross margin decreased 340 basis points to 43.4% of sales due to the impact of higher distribution costs as well as higher manufacturing costs primarily related to commodities and higher tariffs, partially offset by productivity and favorable volume and price.
The company says it experienced shortages of many key raw materials during the quarter. Labor shortages at suppliers and third party manufacturers and transportation challenges also resulted in supply issues. CHD expects the supply issues to begin to abate in Q4, however significant inflation of material and component costs is impacting its gross margin outlook. CHD expects higher input costs and transportation costs to remain elevated for the rest of the year.
Looking ahead, Church & Dwight anticipates sales growth of ~5% vs. +5 to +6% prior view vs. 5.7% consensus. Organic sales growth of ~4% is anticipated vs. +4% to +5% prior outlook. Adjusted EPS is expected to fall at lower end of a +6% to +8% range.
Shares of Church & Dwight fell 0.21% premarket to $86.73 following the earnings beat.