Boston — A favorable foreign exchange rate of 6 percent, acquisition of the Nanfu battery business in China, and the positive effect of lower trade and consumer spending all helped the Duracell battery business at Gillette reach net sales of $414 million in the first quarter, an 8 percent increase.
Profit from operations in Gillette’s Duracell battery business reached $74 million, nearly double that of the year-ago three months. This gain reflects manufacturing efficiencies and overhead cost reductions.
Duracell’s value share in the United States remained stable, compared with the previous year, in part due to stepped-up advertising spending and improved marketing programs, said the company, and despite significant promotional activity by low-price and private-label products.
However, U.S. battery category sales declined from a year ago, said Gillette, when these had been up sharply as a result of security concerns and incremental military sales.
"The battery category continues to be challenging," said James Kilts, chairman/CEO. But "all the pieces are coming together," said Kilts, who went on to praise Duracell’s strength in existing products, trade acceptance of new products and the company’s marketing programs.
Duracell has increased manufacturing productivity and cost savings as a result of two years focusing on the fundamentals of the battery business, said Kilts. This comes on the heels of high growth in key international markets, he said.
Consolidated Gillette sales in the first quarter, ended March 31, increased 13 percent, hitting $2.2 billion, up from $2 billion in the same three months in 2003. Favorable foreign exchange contributed 7 percentage points to the net sales gain. The gain also was helped by the company’s razor business and improvements in Duracell.
Net income climbed to $376 million in the first quarter, an increase of 43 percent over the $263 million posted in the year-ago period. The increase was driven by strong operating results and a lower effective tax rate.