2007 Financial Results
|Energizer Holdings, Inc. Press Release (excerpted)||FlashlightNews.org - 11/01/2007|
Company reports 8% increase in North American battery sales, 14% increase in International battery sales
Energizer Dock & Go Charger
ST. LOUIS, Mo. - Energizer Holdings, Inc. today announced results of its fourth quarter ended September 30, 2007. Net earnings for the quarter were $60.3 million, or $1.03 per diluted share, versus net earnings of $39.1 million, or $0.66 per diluted share in the fourth fiscal quarter of 2006. Included in the current quarter are charges of $4.6 million, after-tax, or $0.08 per share, for restructuring projects in Europe, which were offset by favorable adjustments of $4.4 million, or $0.08 per diluted share, due to a reduction of prior year tax accruals. Last year's fourth quarter included:
- charges of $13.9 million, after-tax, or $0.23 per diluted share, related to restructuring projects in Europe,
- a charge of $3.7 million, after-tax, or $0.06 per diluted share, related to a pension charge, partially offset by,
- previously unrecognized tax benefits related to foreign losses and favorable adjustments to prior years' tax accruals totaling $8.0 million, or $0.13 per diluted share.
The net impact of these items is a decrease of $9.6 million, or $0.16 per diluted share, in the net earnings for the fourth fiscal quarter of last year.
"Both the battery and shaving businesses are performing well, and we look for this momentum to continue into 2008," said Ward M. Klein, Chief Executive Officer. "Furthermore we are excited about the Playtex acquisition and the opportunity to integrate Playtex with Schick to form a personal care division with nearly $1.8 billion in sales. We anticipate organic growth in the acquired brands and some synergies in 2008 as we pragmatically balance the long-term health of the businesses with achieving our synergy targets. We anticipate the earnings accretion from the acquisition will be modest at first and growing during fiscal 2008 and 2009.
Sales for the quarter were $875.0 million, an increase of $44.9 million, as the International Battery and Razors and Blades segments showed improvement. Segment profit increased 17% to $136.3 million for the quarter due to improvements in the Razors and Blades and North American Battery segments. On a constant currency basis, sales increased 3% and segment profit increased 7%. General corporate and other expenses decreased $11.8 million, and interest and other financing items decreased $5.1 million.
Sales for fiscal 2007 were $3,365.1 million, an increase of $288.2 million in absolute dollars and $212.7 million on a constant currency basis, as all three segments showed improvements. Segment profit for the fiscal year was $627.8 million, an increase of $57.8 million in absolute dollars and $24.5 million on a constant currency basis as improvements in the North America Battery and Razor and Blades segments were partially offset by lower International Battery results. For the year, general corporate and other expenses decreased $17.4 million, and interest and other financing items decreased $2.5 million.
North America Battery
Net sales for the fourth quarter of $343.8 million were essentially flat compared to the same quarter last year as lower volume was offset by favorable pricing and product mix and favorable currency impacts. The largest portion of the volume decline related to pipeline fill sales of Energi-to-Go in last year's fourth quarter versus replenishment volume in the current quarter. Eveready carbon zinc and non-branded alkaline units declined while lithium and rechargeable battery units increased in excess of 20% as we continued to focus on performance batteries with growth outpacing the overall category. Energizer Max volume was down slightly due to virtually no hurricane-related demand this year. Overall pricing and product mix was favorable primarily due to the price increase taken in January 2007.
Gross profit for the quarter increased $16.1 million reflecting primarily the aforementioned favorable pricing. Sales volume declines had an insignificant impact on gross profit as declines occurred in the lowest margin product lines. Year-over-year material cost increases of $12.4 million were nearly offset by other cost reduction activities and some one-time favorable cost items. Segment profit for the quarter increased $9.2 million, or 13%, as higher gross profit was partially offset by higher advertising and promotion spending.
The United States (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 4% in dollars for the 12 weeks ending September 28, 2007, versus the same period last year, as price increases and consumers trading up to performance brands were partially offset by declines in hurricane preparedness sales in the southeastern U.S. Retail consumption of Energizer's products increased 6% in dollars for the same period. Energizer's growth is a result of a continued focus on brand and category building activities including more effective merchandising and product mix management, and shifting price-oriented promotions to more equity building events.
For the year, sales increased $96.8 million, or 8%, primarily due to higher pricing and sales volume. For the current year, Energizer Max unit sales were flat. Lithium and rechargeable battery units grew in excess of 30%. Gross profit increased $49.9 million for the year as higher sales were partially offset by higher product costs, primarily due to the increased cost of zinc. Product cost in the current year was unfavorable $33.9 million compared to the same period last year as material cost increases of $49.7 million were partially offset by other cost reductions. Segment profit increased $29.8 million, or 10%, as higher gross profit was partially offset by higher advertising, promotion and selling expenses.
Net sales for the quarter were $264.5 million, an increase of $32.8 million, or 14%. Absent favorable currency impacts, sales increased $19.9 million, or 9%, due to higher volumes and favorable pricing and product mix. Volume growth was broad-based, with all areas contributing. Energizer branded alkaline posted double digit volume growth and rechargeable and lithium volume increased in excess of 30% while other product lines were relatively flat. Price increases in a number of countries were partially offset by unfavorable package size mix, as sales shifted to larger pack sizes, which sell at lower per unit prices.
Gross profit increased $10.6 million due to favorable currency effects. Absent currencies, gross profit was essentially flat as the benefit of higher sales volume and pricing was offset by unfavorable product costs, primarily due to higher zinc and other commodity metals costs. Segment profit declined $1.8 million in absolute dollars and $9.6 million on a constant currency basis due to higher selling, general and administrative and advertising and promotion expenses.
For the year, net sales increased $132.4 million, or 14%, with favorable currency accounting for $45.3 million of the increase. On a constant currency basis, sales increased 10%, primarily on higher volumes in all areas and higher prices, partially offset by unfavorable product mix, primarily in Europe.
Gross profit increased $32.9 million in absolute dollars, but declined $5.1 million on a constant currency basis, as the impact from higher volume and pricing was more than offset by $49.4 million of unfavorable product cost, primarily due to material costs. Segment profit was essentially flat in absolute dollars but declined $26.2 million excluding currency impacts due to higher selling, general and administrative and advertising and promotion expenses in addition to the gross profit impact.
Looking forward, we expect material costs to continue to be unfavorable in the next quarter compared to the first quarter of fiscal 2007. Implemented price increases and other product cost savings are expected to fully offset these increases.
Beginning in the first fiscal quarter of 2008, Energizer will report results of two segments: the household products segment, which will include global batteries and flashlights, and the personal care segment, which will include wet shave, skin care, feminine care and infant care.
To view the entire report, go to: Energizer News Releases.