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Duracell Q1 Battery Sales Increase 16%

5/07/2003 09:59:00 AM Eastern

Boston - Due to the heightened security alerts preceding, and at the start of the Iraqi war, consumers stocked their homes with batteries, helping first quarter sales at Duracell climb 16 percent, to $384 million.

Duracell battery business also moved into the black during the first three months, ended March 31, hitting a profit of $39 million, compared with a $1 million loss in the year-ago period.

As consumers work down the battery inventories, accumulated because of security reasons, Duracell's parent Gillette said it anticipates a moderation of demand for its segment's batteries during the balance of the year.

The company also is concerned about competitive actions that could result in continued deflation in the battery category, hurting both retailers and manufacturers.

At the same time, Gillette said it remains fully committed to a Duracell strategy that will restore segment growth through increased equity-building programs, a reduction in prices and promotion and the elimination of free-cell giveaways.

In addition to increased consumer sales during the first quarter, Duracell enjoyed incremental battery sales to the military. Restraining growth was the impact of lower pricing associated with the company's U.S. price-deal realignment program and the exit from the zinc-carbon battery businesses in South Africa and India.

Gillette noted that Duracell profit in the first quarter of 2002 was impaired by costs incurred with the recall of select hearing aid batteries.

For this year's first quarter, strong volume - supported by what the company called a highly effective 'Trusted Everywhere' advertising campaign, favorable exchange rates and manufacturing efficiencies - helped fuel profit growth. Profit was impacted negatively by expenses related to the company's Functional Excellence program.

Consolidated first quarter Gillette net sales climbed 14 percent, hitting $2 billion, up from $1.7 billion in the same three months in 2002. Consolidated net income for the quarter increased 18 percent, reaching $263 million, up from $223 million year-on-year.