WD-40 Posts Lower Income

Share

WD-40 Posts Lower Income

WD-40 Co. posted net income of $14 million for the quarter ending Nov. 30, a 25% drop from $18.5 million in the same period in 2021. Underperformance in its Europe, Middle East and Africa segment was responsible for the decline, according to the company.

Diluted earnings per share also slowed, from $1.34 in 2021 to $1.02 this year. The San Diego-based company’s fiscal year runs from Sept. 1 to Aug. 1.

Get alerts when new Sustainability Blog articles are available.

Loading

Net sales for its maintenance products segment – which includes WD-40 lubricants – totaled $116.3 million, down 8% from $126 million.

“This decrease was primarily due to lower sales of WD-40 Multi-Use Product, which decreased 12 percent compared to the prior fiscal year quarter,” the company said in its earnings release. “This decline was driven by lower sales volumes linked to recent pricing actions which resulted in a lower level of customer orders and promotional programs. Sales declines were also due to unfavorable changes in foreign currency exchanges rates and weaker economic conditions in some regions. These sales declines were partially offset by the sales price increases implemented over the last twelve months.”

Overall net sales, which includes homecare and cleaning products, reached $124.9 million, compared to $134.7 million in 2021, down 7%.

In the Americas, net sales increased 3% year-over-year to $58 million, primarily due to higher sales of maintenance products in the United States, which increased 15 percent, according to the company. The higher sales can be attributed to the impact of price increases, increased production capacity and improved availability from a strengthened supply chain. In Latin America, however, sales were down 31 percent due to timing of marketing distributor orders.

Net sales in Europe, Middle East and Africa fell 29% due to lower sales of maintenance products in both direct and distributor markets, which decreased 22% and 43%, respectively, the company said. Changes in foreign currency exchange rate impacted sales negatively; on a constant currency basis, sales would have decreased only by 15%. Lower sales in distributor markets can be primarily attributed to the suspension in sales of products to marketing distributor customers in Russia and Belarus last March.

Net sales in Asia rose 25% to $26.1 million because of higher sales of maintenance products in the Asia-Pacific distributor markets and China, which increased 41% and 22%, respectively. In Asia-Pacific higher sales were mainly due to successful promotional programs and the easing of COVID-19 lockdown measures. Changes in foreign currency exchange rates had an unfavorable effect on sales for the segment. On a constant currency basis, Asia-Pacific sales would have increased 31% compared to the prior year.

“While we saw topline growth in our Asia-Pacific and Americas segments, our EMEA segment reported sales that were softer than we would like to see,” WD-40 president and CEO Steve Brass said. “In EMEA, we’ve experienced significant headwinds from fluctuating currency exchange rates, a lower level of customer orders, weaker economic conditions, and a reduction in sales linked to our decision to suspend sales in Russia in 2022.”

Related Topics

Business    Earnings    Finished Lubricants    Market Topics