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Energizer N.A Battery Sales Rise 2%

1/23/2006 11:53:00 AM Eastern

St. Louis — Battery sales in the North American business segment of Energizer Holdings edged upward 2 percent in the company’s fiscal first quarter, hitting $395.8 million, up from a year-ago $386.4 million.

The higher sales volume in the period was partially offset by unfavorable pricing and product mix, leading to a lower segment profit of $114.9 million, down year-on-year from $117.8 million.

Lithium and rechargeable batteries continued volume growth in excess of 20 percent, while Energizer Max unit sales increased 3 percent. The overall unfavorable pricing and product mix was due to the continued shift to larger pack sizes, which sell at lower per-unit prices.

Gross profit in North America decreased $6.8 million for the quarter, ended Dec. 31, as the contribution of incremental sales volume was more than offset by unfavorable pricing and higher product cost. Product cost in the current quarter was $5.7 million unfavorable to the prior year quarter due to higher year-over-year materials cost. Segment profit decrease was due to lower gross margin, partially offset by lower advertising and promotion and selling expenses.

The U.S. retail battery category increased 4.4 percent in dollars for the 12 weeks ended Dec.3, compared with the same period the previous year. Retail consumption of Energizer’s products increased 9.5 percent in dollars for the same period.

Energizer said its focus on the performance segment, specifically rechargeable and lithium cells, resulted in an increase of about 1.8 share percentage points, compared with the same period in 2004, bringing total company share to about 37.7 percent for the quarter.

Energizer estimated that retail inventory at the end of the fourth quarter was at seasonally normal levels.

Following holiday promotional commitments, and with higher post-holiday retail pricing taking effect, the company expects to see benefits from its battery price increases. However, higher materials costs and the continuing shift to larger package sizes are likely to offset at least a portion of any favorable pricing attained in the near term.

In the fourth quarter, sales of alkaline batteries dipped slightly, to $442.3 million, down from a prior-year $447.7 million. Carbon zinc cell sales were flat at about $72 million, while sales of other batteries moved up to $151.9 million, from $127.7 million in the fourth quarter of 2004.

Consolidated Energizer fourth-quarter sales rose to $882.4 million, up from a year-ago $875.9 million. Higher sales in the company’s battery business were offset by lower sales in razors.

Consolidated net earnings were flat at $120 million.

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