Boston – Cost cutting and lower goodwill amortization led to considerable improvement in margin for the Duracell battery segment at Gillette in the fourth quarter, with profit increasing 32 percent, to $110 million.
These factors more than countered the negative effect of unfavorable shifts in mix among brands, pack sizes and retail channels. However, Duracell sales dropped 2 percent in the three months, ending Dec. 31, to $656 million.
For the 12 months, sales of Duracell batteries fell 3 percent, to $1.9 billion, while profit for the year increased 7 percent, to $233 million. This reflected manufacturing efficiencies, overhead cost savings and lower goodwill amortization.
Duracell said it notched its fourth quarter profit increase despite highly competitive market conditions that led to a major initiative to reduce pricing and promotional activity, intended to restore growth and value to the Duracell brand.
The more efficient Duracell battery segment helped drive consolidated profit up 73 percent at parent Gillette, which posted a $346 million net income in the fourth quarter, up from $200 million in the year over year. In 2001, Gillette was saddled with a $172 million pretax restructuring costs, while the fourth quarter last year included a $9 million pretax recovery of restructuring reserves.
Sales climbed 5 percent in the three months, hitting $2.5 billion, up from $2.4 billion in the same three months in 2001.
For the 12 months, Gillette sales also increased 5 percent, reaching $8.4 billion, compared with $8 billion year over year. Net income for the year rose to $1.2 billion, up from $910 million in the same three months the previous year.