Energizer Fiscal Q3 Income More Than Doubles
By Jeff Malester -- TWICE, 7/25/2002
St. Louis - Flying in the face of stiff battery business competition, Energizer Holdings ramped up its drive for product and cost savings in its fiscal third quarter, more than doubling its net earnings, to $39.8 million in the three months, up from $15.5 million in the year-ago period. Excluding unusual items, 2001 third quarter results were $7.2 million.
Energizer sales in the third quarter climbed 12 percent, hitting $389.9 million, up from $347.2 million in the same three months last year.
The company's North American segment helped contribute to the overall increase, with its sales rising 21 percent, to $231.2 million, up from $191.3 million in the same quarter last year. Operating profit before unusual items in North America reached $60 million in the third quarter, ended June 30, up from $23.2 million the previous year. The increase reflected higher margins and lower overhead expenses.
The North American sales increase was attributed primarily to higher alkaline unit volume, Energizer said. A large portion of the volume increase is attributable to lower sales in last year's third quarter when the company's battery sales lagged retail consumption by 8 percent to 10 percent.
In addition, the third quarter includes increased sales related to a packaging change for a major customer, which resulted in lower sales in the second quarter, as well as sell-in for incremental fourth quarter promotional displays with several customers.
"While our North American sales increased 21 percent, we estimate that consumption of our product at retail was essentially flat," said J. Patrick Mulcahy, CEO. "The sales increase was related primarily to the timing of shipments and year-over-year comparative factors. Subject to the sell-through of fourth quarter promotions, we are generally comfortable with retail inventory levels," he said.
Net sales for the nine months in North America rose 9 percent, to $767.3 million, up from $705 million year over year. The increase was primarily due to higher alkaline battery volume, partially offset by unfavorable pricing and product mix, reflecting intense competition and higher promotional activity. Profit for the nine months hit $220.9 million, due to lower product cost rates and higher sales, compared with $149.4 million in the year-ago period.
Overall Energizer sales for the nine months moved up 3 percent, reaching $1.30 billion, compared with $1.26 billion in the same period last year. Net earnings were $130.2 million for the nine months, up from $75.5 million in the same period in 2001. Excluding unusual items, net earnings results for the nine months would have been $142.1 million, compared with $74.6 million year over year.
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