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Dial dishes out warning
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March 10, 2000: 11:01 a.m. ET
Consumer products maker expects earnings to slip; stock plunges 25%
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NEW YORK (CNNfn) - Consumer products maker Dial Corp., known for its popular brands of soaps and detergents, warned Friday that its 2000 earnings and sales will be below year-earlier results, the second profit warning from a major consumer products company in less than a week.
The warning sent shares of Dial (DL: Research, Estimates) plunging 3-5/8, or about 25 percent, to 10-5/8 in early New York trade. The shares earlier fell as low as 10-1/4.
Dial, which makes Dial soaps, Purex detergents and Renuzit air fresheners, said its earnings will decline roughly 10 to 12 percent from 1999. Analysts polled by First Call Corp. had expected the Scottsdale, Ariz.-based company to earn 29 cents a diluted share in the first quarter, 33 cents in the second quarter, and $1.33 for the full year. Dial posted earnings of $116.8 million, or $1.17 a share, in 1999.
The company attributed its anticipated shortfall to lower-than-expected sales of Armour Star canned meats, another of its flagship products, after consumers stocked up at the end of last year on concerns about Y2K disruptions and didn't continue their buying when that turned into a non-event. It also blamed increased competition in Argentina and higher petroleum costs, which affect its transportation expenses, for the earnings shortfall.
"This isn't the most pleasant thing we've done in a long, long time, yet the business remains intact and we'll get over this disappointment," Malcolm Jozoff, Dial's chairman, told analysts during a conference call.
The warning follows on the heels of Procter & Gamble Co.'s (PG: Research, Estimates) announcement earlier this week that its 2000 earnings will be about 10 percent below Wall Street expectations. Higher-than-expected costs for raw materials, manufacturing, inventory and logistics costs in Europe, and aggressive competitive pricing in South America were cited for cutting into its profits.
That warning helped push the Dow Jones industrial average to its fourth-biggest point loss in history; Procter & Gamble is one of the 30 stocks that make up the average; Dial is not.
Dial also warned that sales won't increase as much as in 1999. Including its joint venture with Henkel LLC, which hurt its 1999 earnings, sales are expected to rise between 2 and 3 percent; in 1999, the company posted sales gains of 13 percent.
Analysts wasted no time lowering the outlook for the company. J.P. Morgan Securities downgraded the stock to "long-term buy" from "buy," while Banc of America Securities downgraded it to "market perform" from "buy."
Shares of other consumer goods companies also dropped. Procter & Gamble (PG: Research, Estimates) fell 1-15/16 to 55-13/16, Clorox Co. (CLX: Research, Estimates) fell 1-3/8 to 32-7/16, Unilever NV (UL: Research, Estimates) fell 1-13/16 to 40-15/16, and Colgate-Palmolive Co. (CL: Research, Estimates) dropped 7/16 to 43-9/16. 
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Dial
Procter & Gamble
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