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Energizer Fiscal Q2 N.A. Battery Segment Sales Drop 3%

St. Louis — Slowing sales of alkaline batteries in the United States accounted for an overall 3 percent sales decrease at the North America battery segment of Energizer Holdings in the company’s fiscal second quarter.

Sales hit $187.5 million, down from a year-ago $194.2 million, as large cell size alkaline volume dropped 34 percent, compared with significant increases year-on-year prompted by terrorism and security concerns.

North American battery segment gross margin in the second quarter declined $2.5 million, or 3 percent, due to lower sales. Segment profit decreased to $39 million from $45.6 million, on lower margin and higher advertising, promotion and overhead expenses.

In the United States, retail alkaline category units dropped about 5 percent in the second three months, ended March 31, compared to the year-ago period, while category value fell 9 percent, according to Energizer.

Retail consumption of Energizer’s alkaline products dipped an estimated 7 percent in units and 9 percent in value during the second quarter, with the company’s quarterly alkaline market share essentially flat at about 31 percent. Energizer estimated that overall retail battery inventory levels at the end of March were at, or slightly above, normal seasonal levels.

Net sales of alkaline batteries for the second quarter were $231 million vs. a year-ago $232.6 million. In the six months, net sales of alkaline cells reached $656.7 million, compared with $643 million year-on-year.

For the six months, North American battery-segment sales climbed 3 percent, hitting $557.4 million, up from $541.7 million in the same period last year. The segment benefited from a favorable currency translation of $6.2 million, higher volume and favorable pricing and product mix.

Segment profit in the six months slipped to $154 million from $155.8 million, as higher product costs, overhead and advertising and promotion expenses were nearly offset by margin on higher sales and currency improvements of $3.5 million.

In the current quarter, consolidated sales increased 64 percent to $592.9 million from $362.6 million year-on-year, primarily due to Energizer’s acquisition of the Schick-Wilkinson Sword razor blade company and higher international battery sales. Net earnings for the second quarter reached $53.4 million, compared with $33 million a year earlier.

Pro forma second quarter 2003 sales were $490.6 million, while pro forma second quarter 2003 income was $18.9 million.