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Energizer Q2 Earnings Up, Sales Down

4/27/2009 10:35:00 AM Eastern

St. Louis — Energizer Holdings announced its second-quarter results today.

 Net earnings for the quarter, ended March 31, were $77 million vs. net earnings of $60.9 million in the prior-year period.

The current quarter includes a favorable adjustment of $14.5 million, net of tax, resulting from a change in the policy by which the colleagues earn and vest in the company's paid time off (PTO) benefit, said the company. This was partially offset by integration and business realignment costs of $4.2 million, after-tax.

Last year's second quarter included an after-tax expense of $1 million, related to the write-up and subsequent sale of inventory purchased in the Playtex Products acquisition as well as integration and other realignment costs of $2.9 million, after-tax, said Energizer.

"The continued weakness of most foreign currencies relative to the U.S. dollar, the general softness of consumer spending and the resulting pullback in retail inventories all continue to weigh down top-line results," said Ward Klein, CEO. "Nevertheless, we have been able to hold market share in the majority of our business while reducing discretionary spending and improving earnings vs. last year. We will continue to adapt to today's environment while maintaining healthy levels of investment in product innovation and brand building."

For the current quarter, total net sales decreased $70.6 million, or 7 percent, to $880.4 million. On a constant currency basis, sales decreased $5.7 million, or less than 1 percent. Gross margin decreased 116 basis points due to the unfavorable impact of currencies, partially offset by the favorable impact of the change in the company's PTO policy, the company said.

Excluding these two impacts, gross margin was 48.1 percent, down slightly vs. the prior year, it said. Segment profit decreased $7.9 million, or 5 percent, to $155.8 million. Excluding the unfavorable impact of currencies of approximately $32 million, segment profit increased approximately $24 million due primarily to lower advertising and promotional spending. General corporate and other expenses increased $5.4 million, while interest expense and other net financing costs declined $11.3 million and $2 million, respectively, said Energizer.

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