Mixed Results For Major Battery Suppliers

By Jeff Malester On Aug 18 2003 - 6:00am

Unfavorable pricing and product mix, as well as lower volume for alkaline batteries, reduced overall fiscal third quarter North American battery sales at Energizer Holdings. Sales were down to $217 million for the quarter, a 6 percent drop from the $231.2 million reported in the year-ago period.

If third quarter 2002 North American sales of $19 million in additional incremental alkaline sales are excluded, the comparative current-quarter alkaline volume was flat, while other products contributed $13.9 million in incremental sales.

Overall alkaline battery sales for the third quarter were $242.7 million, down from $255.4 million in the same three months a year earlier. Nine-month overall alkaline sales hit $885.7 million, about flat with the $887.7 million registered in the same period in 2002.

North American battery profit dropped to $49.6 million in the third quarter, ended June 30, compared with $58.3 million in the year-ago period. This was due to lower gross margin, decreasing $12.4 million, partially offset by lower advertising and promotional expenditures.

Retail alkaline battery category units grew an estimated 2 percent in the United States quarter over quarter, said Energizer, while category value decreased 6 percent, reflecting lower everyday pricing by retailers and continued promotions.

Retailer consumption of Energizer's alkaline products increased an estimated 5 percent in units and decreased an estimated 5 percent in value in the third quarter, compared with the year-ago period.

"Lower everyday pricing at retail combined with continuing residual promotional activity have eroded overall category pricing," said Pat Mulcahy, CEO. "It is still unclear whether the category has reached pricing and promotional stability or whether net retail pricing will continue to deteriorate."

For the nine months, Energizer North American battery sales were essentially flat, at $765.6 million, compared with $767.3 million in the same period in 2002. Profit for the category hit $206.8 million in the nine months, compared with $214.8 million in the year-ago period.