Saturday, September 27, 2014

Venezuela: Government Seemingly Intends to Nationalize Assets of Clorox de Venezuela SA

According to The Latin American Tribune, Venezuelan Vice President Jorge Arreaza announced, with endorsement by President Maduro, that the Venezuelan government has occupied the Santa Lucía and Guacara production facilities of Corporación Clorox de Venezuela SA (Clorox Venezuela).

"This is now a factory liberated by its workers," Vice President Jorge Arreaza said on Friday night (September 26) in a televised address from one of Clorox's facilities just outside Caracas. Arreaza is the son-in-law of former Venezuela President Hugo Chávez.

"The Venezuelan government's actions raise grave concerns, and Clorox and its affiliates cannot be responsible for the safety of workers and the surrounding communities or any liability or damages resulting from this occupation," said Clorox. 

"The production of cleaning products, in particular bleach, is a highly specialized and technical process. To protect the community, Clorox Venezuela had safely secured the plants in complete shut-down mode prior to its exit, including removal of all chlorine and lock-down of equipment."

"While Clorox Venezuela and its parent, Clorox Spain SL, reserve their rights under all applicable laws and treaties, Clorox Venezuela is prepared to engage in conversations with the Venezuelan government regarding prompt, adequate and effective compensation."

On September 22, 2014, The Clorox Company reported Clorox Venezuela was "no longer viable." As a result, Clorox Venezuela immediately discontinued its operations, and announced it was seeking to sell its assets.

"While Clorox Venezuela would have preferred to maintain its business in Venezuela and continue supplying its products to Venezuelans, given the operating restrictions imposed by the Venezuelan government, considerable economic uncertainty, continual supply disruptions, and without significant and ongoing price increases as well as other remedial actions, Clorox Venezuela anticipated considerable operating losses would continue into the foreseeable future," the company said.

For nearly three years, Clorox Venezuela has been required to sell more than two-thirds of its products at prices frozen by the Venezuelan government. During this same period, Clorox Venezuela experienced cumulative triple-digit inflation resulting in massive increases in Clorox Venezuela's input costs, including packaging, raw materials, transportation and wages. As a result, Clorox Venezuela had been selling its products at a loss, causing ongoing operating losses.

"Clorox Venezuela repeatedly met with government authorities to help them understand the rapidly declining state of the business, including the need for immediate, significant and ongoing price increases and other critical remedial actions to address these adverse impacts," said Clorox. "Based on the Venezuelan government's representations, Clorox Venezuela had expected significant price increases would be forthcoming much earlier this year. However, price increases subsequently approved by the government were nowhere near sufficient and would have caused Clorox Venezuela to continue operating at a significant loss."

The Clorox Company, Clorox Spain SL, and their respective affiliates had initiated an expedited sale process to facilitate a swift transition of the Clorox Venezuela assets to a new owner. The Venezuelan government had been advised of this expedited sales process.

The Clorox Company Confirms 2015 Outlook for Sales and EPS From Continuing Operations

"The company's fiscal 2015 financial outlook continues to anticipate sales from continuing operations to be about flat and diluted earnings per share from continuing operations to be in the range of $4.35-$4.50, and is not impacted by the takeover of these assets in Venezuela," Clorox said.

The Clorox Company will discuss its fiscal 2015 financial outlook when it communicates first-quarter results on October 31. In addition, concurrent with its first-quarter Form 10-Q filing, the company will provide historical company results that reflect the Venezuelan business on a discontinued operations basis.

Corporación Clorox de Venezuela S.A.

Clorox Venezuela began operations in 1990 with distribution of the Pine-Sol brand. It subsequently acquired Mistolín® cleaners and the Nevex® brand. The business also produced cleaning utensils under brand names such as Bon Bril®, Marlene® and Lustrillo®. Facilities include two administrative offices in Caracas, two manufacturing sites in Santa Lucía and a third manufacturing facility in Guacara.

The Clorox Company

The Clorox Company is a leading multinational manufacturer and marketer of consumer and professional products with approximately 8,200 employees worldwide and fiscal year 2014 sales of $5.6 billion. 

Clorox markets some of the most trusted and recognized consumer brand names, including its namesake bleach and cleaning products; Pine-Sol® cleaners; Liquid Plumr® clog removers; Poett® home care products; Fresh Step® cat litter; Glad® bags, wraps and containers; Kingsford® charcoal; Hidden Valley® and KC Masterpiece® dressings and sauces; Brita® water-filtration products and Burt's Bees® natural personal care products. The company also markets brands for professional services, including Clorox Healthcare®, HealthLink®, Aplicare® and Dispatch® infection control products for the healthcare industry. More than 80 percent of the company's brands hold the No. 1 or No. 2 market share positions in their categories.

9/22/2014 Clorox to Leave Venezuela

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