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Energizer Q3 Earnings Steady

7/25/2006 01:07:00 PM Eastern

St. Louis — Energizer Holdings, marketers of Energizer batteries, reported its fiscal third quarter net earnings were $51.3 million, compared with net earnings of $52.3 million during the same quarter last year.

Sales for the quarter, ended June 30, of $734.9 million increased 6 percent. Segment profit increased 12 percent to $118 million for the quarter on improvements in the razors and blades and North America battery segments. Unfavorable currency impacted sales by $3.7 million and segment profit by $1.6 million. General corporate and other expenses increased $10.2 million, and interest and other financing items increased $10 million.

Ward Klein, CEO, commented, “On the battery side, the near-tripling cost of zinc since the announcement of last year's U.S. price increase is a negative on our current product cost, and this impact will accelerate in the future. However, the battery category continues to grow nicely, particularly in the performance segment where our portfolio of products has the strongest competitive position.”

North America net sales in batteries for the third quarter were $275.7 million, an increase of $23 million, or 9 percent, as higher volumes and pricing were partially offset by an unfavorable product mix. Lithium and rechargeable products volume grew in excess of 30 percent for the quarter while Energizer Max unit sales increased 3 percent. Price increases contributed approximately $10 million in the current quarter but were partially offset by unfavorable product mix due to a continuing shift of sales to larger package sizes, which sell at lower per unit prices.

Gross profit increased $10 million for the quarter, on higher sales, partially offset by higher product costs. Material and distribution costs were $3.2 million higher in the quarter, compared with the same quarter last year. For the quarter, segment profit increased $4.4 million as the higher gross profit was partially offset by higher advertising, promotion, general and administrative expenses, Energizer said.

The U.S. retail battery category is defined as household batteries (alkaline, carbon zinc, lithium and rechargeable) and specialty batteries. The U.S. retail battery category increased by 6 percent in dollars for the 12 weeks, ended June 17, vs. the same period last year. Retail consumption of Energizer's products increased 10 percent in dollars for the same period. The company’s focus on the performance segment, specifically rechargeable and lithium batteries, resulted in an increase of approximately 1 share point, compared with the same period in the prior year, bringing Energizer's share of the total retail category to approximately 37 percent for the quarter. Energizer estimates that retail inventory levels at June 30 were in line with normal seasonal levels.

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