Whether you call it saleratus (aerated salt), sodium bicarbonate, or plain old baking soda, Church & Dwight is a top maker worldwide of the powder under the ARM & HAMMER name. The consumer products company has expanded the key brand into a products portfolio powerhouse, with laundry detergent (the company's top consumer business by sales), bathroom cleaners, carpet deodorizer, air fresheners, toothpaste, antiperspirants, industrial-grade carbonates, cat litter, and animal nutrition. The company's other brand names include XTRA, Oxiclean, Nair, First Response, Orajel, and SpinBrush. Church & Dwight, which operates globally, also makes Trojan-brand condoms.
Church & Dwight has operations, including manufacturing facilities, in the US, as well as in Australia, Brazil, China, France, and the UK. Furthermore, it exports its products to more than 80 other countries. The company's US manufacturing facilities are located in Pennsylvania, Missouri, New Jersey, Virginia, Ohio, California, and Iowa.
Church & Dwight has diversified its operations during the past 15 years from a US-centric business to a global company that derives about 16% of its sales from outside of the US.
The company's business segments are divided into three groups: Consumer Domestic, Consumer International, and Specialty Products.
The Consumer Domestic segment comprises nine power brands -- ARM & HAMMER, Trojan condoms, XTRA laundry detergent, Oxiclean stain removers and cleaning solutions, Nair depilatories, First Response home pregnancy and ovulation test kits, Orajel oral analgesics, and SpinBrush battery-operated toothbrushes -- as well as other household and personal care products. The segment contributed 74% of sales in 2014.
The Consumer International segment sells primarily personal care products in international markets. Some of them share the same brands as its domestic product lines.
The Specialty Products segment is the nation's largest producer of sodium bicarbonate, which it sells together with other specialty inorganic chemicals for a variety of applications for the industrial, institutional, medical, and food industries. Church & Dwight's Specialty Products segment, which logs some 9% of its sales, is what sets the company apart from other consumer products companies. It manufactures antacid feed additives for cattle, industrial- and medical-grade sodium bicarbonate (used in kidney dialysis), potassium carbonate (used in video monitor glass), and industrial cleaning products. A small subsidiary in the UK produces specialty chemicals for European markets.
As part of its operations, Church & Dwight owns 50% joint venture Armand Products Company, which operates a potassium carbonate manufacturing plant in Muscle Shoals, Alabama. It also operates a Brazilian subsidiary in Rio de Janeiro, Quimica Geral do Nordeste (QGN).
Sales and Marketing
Church & Dwight sells a bulging portfolio of consumer products through a broad distribution platform that includes supermarkets, mass merchandisers, wholesale clubs, drugstores, convenience stores, dollar, pet, and other specialty stores and websites. These customers sell products directly to consumers. It also sells specialty products to industrial customers and distributors.
Three customers accounted for 36% of sales in 2014, including Wal-Mart and its affiliates, which generated about 25%.
Marketing expenses in 2014 were $416.9 million, an increase of $17.1 million over 2013.
In 2013 the company increased its marketing spending to coincide with the launches of new premium products in power brands. Such campaigns include ARM & HAMMER ULTRA POWER 4X, a concentrated form of liquid laundry detergent, and a line of lubrication products under the Trojan brand.
Church & Dwight's net sales have seen a consistent upward trend since 2010.
In 2014 its net sales increased by 3% due to higher sales from the Consumer Domestic and Speciality Products segments.
Consumer Domestic net sales increases included the new product launches of ARM & HAMMER CLUMP & SEAL clumping cat litter and Oxiclean liquid laundry detergent, and higher sales of Oxiclean laundry additive products, Trojan products, Vitafusion gummy dietary supplements and Orajel oral analgesics.
Speciality Products net sales reflected higher sales volume of animal nutrition products and performance products.
The net income of Church & Dwight have followed a similar trend to that of its revenues. In 2014 net income increased by 5% due to higher revenues, decreased selling, general and administrative expenses, and equity in earnings of affiliates, partially offset by higher marketing expenses.
Selling, general and administrative expenses decreased due to lower compensation costs and employee benefit costs, legal costs, intangible asset impairment charges and cease use charges associated with the company’s Princeton, New Jersey leased buildings
Equity in earnings of affiliates increased due to profit improvement from Armand and a smaller loss at Natronx.
Marketing expenses grew as the result of expenses in support of new product launches and increased expenses in certain other power brands.
In 2014 net cash provided by the operating activities increased by 8%.
Primarily, Church & Dwight has been investing in its consumer business in the US, where it sells most of these products. The segment houses Church & Dwight's eight "power brands," or well-recognized brand names: ARM & HAMMER, Trojan, XTRA, Oxiclean, Nair, First Response, Orajel, and SpinBrush.
To continue to deliver attractive results for stockholders in this environment, Church & Dwight intends to continue to aggressively pursue several key strategic initiatives: maintain competitive marketing and trade spending, tightly control its cost structure, continue to develop and launch new and differentiated products, and pursue strategic acquisitions. It also intends to continue to grow its product sales geographically, and maintain an offering of premium and value brand products. The company’s long-term mission is to secure annual organic revenue growth of 3- 4%, gross margin expansion, and tight management of overhead costs.
In 2015 the company planned to continue to heavily invest in the Oxiclean brand towards establishing Oxiclean as a major brand in multiple categories. Major brand launches and launches of other products are anticipated to contribute more incremental new product revenues than the introduction of new products has in prior years, and a significant portion of those revenues will include expansion into new categories within the premium household products segment.
In 2014 Major League Baseball and Church & Dwight signed a multi-year, multi-category sponsorship agreement making ARM & HAMMER and Oxiclean "The Official Laundry Detergent and Stain Remover of MLB".
Its largest segment, household, was responsible for bringing in 44% of Church & Dwight's revenues in 2014. The company has been able to maintain its momentum by increasing its manufacturing capacity and keep up with growth of its popular laundry segment. It did so by building a new integrated laundry detergent plant and distribution center located in York County, Pennsylvania. The facility replaced its existing laundry detergent plant in North Brunswick, New Jersey. It also expanded its distribution of ARM & HAMMER laundry and pet care products, as well as Oxiclean and Orange Glo, in North America. (Church & Dwight's expansion and upgrade effort was funded by its 2010 sale of the well-known Brillo brand of scouring pads to Armaly Brands, a manufacturer of polyester sponge brand Estracell.)
While Church & Dwight's strong base in the US has helped it weather regional downturms, the company continues to concentrate on its international consumer business. It peddles brands such as Nair in foreign markets and sells Trojan condoms in China and the UK. Since purchasing SpinBrush, the company markets the top US seller in Australia, Canada, China, Japan, and the UK.
Church & Dwight continues to experience high raw material and energy costs. Historically, it has been able to mitigate the effects of cost increases primarily by implementing cost reduction programs. Maintaining tight controls on its overhead costs has enabled it to effectively navigate recent challenging economic conditions.
To expand its gummy vitamin production capacity, in 2014 it began construction of a new production line at its manufacturing facility in Pennsylvania.
In 2013 the company was able to increase the market share of six of its eight power brands. New product rollouts, including its ARM & HAMMER Ultra Last detergent and Oxiclean Dishwashing Booster, have helped to fuel growth. Premium products, when tend to sell well industry-wide regardless of Wall Street woes, have also allowed Church & Dwight to weather poor economic times. Indeed, its portfolio consists of 60% premium products and 40% value brands.
To consolidate its growing operations from four separate buildings to one 250,000-sq.-ft. one, Church & Dwight moved its headquarters within New Jersey in 2013. As part of the move, the company stands to benefit from potential financial incentives approved by the state's Economic Development Agency aimed at retaining jobs and creating new ones at the headquarters site. The new location on Charles Ewing Boulevard houses the executive offices and functions focused on sales, marketing, operations, finance, accounting, information technology, law, and human resources.