Energizer's Fiscal Q3 Net Sales Drop Off 14%

ST. LOUIS— Intensifying competition, currency devaluation and retailer "inventory destocking" pushed net sales downward 14 percent at battery maker Energizer Holdings, reaching $346.6 million in its fiscal third quarter, compared with pro forma sales of $400.8 million in the same period last year.

The company said the sales decline was attributable to lower pricing and product mix in North America and Asia, and currency devaluation in a number of key markets.

Energizer sales in North America were $192.9 million, down about 16 percent from the $229.6 million reported in the same quarter in 2000. This was due to unfavorable pricing and product mix, which reflected higher promotional spending and lower volume, said the company. Segment profit declined $37.6 million, which reflected lower margins, partially offset by lower marketing and distribution costs.

Alkaline battery sales, by far Energizer's biggest dollar-volume contributor, dropped about 16 percent to $221.1 million in the third quarter ended June 30, compared with $264.1 million in the year-ago third quarter. Carbon zinc batteries were down about 10 percent to $55.6 million in the third quarter, compared with $65.6 million in the same quarter in 2000.

A.C. Nielsen data placed Energizer's total battery share at retail for the 13-week period ended June 30 at 31.1 percent, down 50 basis points from the same period last year. For the 52-week period ended on the same date, battery market share at retail increased 70 basis points to 33.1 percent, compared with the same period the previous year. Total alkaline battery sales climbed 1 percent for the 13 weeks, compared with the year-ago period.

Net earnings for the three months were $15.7 million, compared with $24.4 million on a pro forma basis for the third quarter in 2000. Excluding $12.3 million in nonrecurring income, net earnings for the third quarter were $3.4 million.

For the nine months, net sales decreased 11 percent to $1.26 billion, compared to the year-ago nine months, due to unfavorable pricing and product mix, currency devaluation and lower volume. Segment profit declined 36 percent to $115.5 million for the nine months, compared to the same period last year, on lower sales, partially offset by lower costs.

Net earnings for the nine months were $75.5 million, compared to the year-ago period. Excluding a nonrecurring item, net earnings were $63.2 million, compared to pro forma net earnings, excluding unusual items, of $122.7 million for the same period last year.

Looking ahead, Energizer CEO J. Patrick Mulcahy was not particularly optimistic, saying that the company cannot promise that the problems of competition, currency devaluation and inventory reduction will soon abate, and that the problem of retailers managing inventory levels downward could continue for the near-term.