Energizer Holdings Inc.
) reported fiscal fourth quarter 2012 non-GAAP adjusted earnings
of $1.76 per share, which comfortably surpassed the Zacks
Consensus Estimate of 1.55 per share and was up from $1.10 per
share reported in the previous-year quarter.
Total revenue declined 4.6% year over year to $1.14 billion
and was in line with the Zacks Consensus Estimate. The decline
was primarily due to weak organic sales (down 1.5% year over
year) and unfavorable foreign exchange (negative impact of 3.1%).
Moreover, weak segment performance also affected the
Personal Care (52% of total revenue) decreased 2.5% year over
year to $590.1 million, primarily due to negative impact of
currency (down 3.0% year over year), which fully offset the
marginal year-over-year increase in organic sales. The decline
was primarily due to decline in Wet Shave sales (down 2.4% year
over year), Feminine Care (down 13%) and Infant Care (down 7%
year over year), which fully offset the 11% increase in Skin Care
Household Products (48% of total revenue) declined 6.8% year
over year to $553.1 million, primarily due to unfavorable foreign
currency (negative impact of 3.1%) and sluggish organic sales
(down 3.7% year over year) in the quarter. Contracting market
share and sluggish household battery market dented the segment's
Gross profit decreased 3.4% from the prior-year quarter to
$527.4 million. Gross margin expanded 60 basis points ("bps") on
a year-over-year basis to 46.1%. Gross margin was positively
impacted by increased prices of Household Products and lower
trade promotional expenses in Personal Care segment.
Spending on advertising and promotion (A&P) was down 28.2%
year over year to $99.6 million. Selling, general and
administrative expenses (SG&A) decreased 1.1% year over year
to $215 million. Research and development expenses (R&D) went
up 0.6% from the prior-year quarter to $30.6 million.
Operating profit increased 15.1% year over year to $222.3
million. Operating margin improved from 16.1% in the
previous-year quarter to 19.4% primarily due to lower operating
expenses. Net adjusted income jumped 48.1% year over year
to $112 million, primarily due to margin expansions and improved
Energizer expects fiscal 2013 adjusted earnings per share in
the range of $6.75 to $7.00 per share. Energizer expects its
advertising and promotional expenses to remain or increase from
From the sales perspective, management expects fiscal 2013
sales to grow in low-single digits aided by mid-single digit
sales growth in the Personal Care segment. Personal Care segment
is expected to be positively impacted by improvement in the
category. However, for the Household Products segment, management
expects a decline in the low-single digits primarily due to lower
Energizer's announced a restructuring program to be completed
over the next two years that is expected to yield pre-tax cost
savings of $200 million on an annualized basis. Management
expects this 75% of the cost savings initiative to improve
profitability and the rest would be ploughed back into the
business for long-term growth perspective.
Energizer's fourth quarter improved on the basis of stringent
cost control and margin expansions. The company's Schick Hydro
and Hydro Silk products witnessed increased sales. Moreover, the
company has also witnessed growth in its international
We believe that product innovations coupled with higher
pricing of its household products and the restructuring
initiatives would positively impact its results going forward.
Moreover, lower-than-expected operating expenses and prudent
product mix would expand margins in the near term.
However, declines in volumes in the battery category,
unfavorable foreign exchange and increasing competition from
companies such as
Procter & Gamble Co.
) are the near-term headwinds.
We have a Neutral recommendation for Energizer over the long
term (6-12 months). Energizer currently holds a Zacks #2 Rank,
implying a short-term Buy rating on the stock.
ENERGIZER HLDGS (ENR): Free Stock Analysis
PANASONIC CORP (PC): Free Stock Analysis
PROCTER & GAMBL (PG): Free Stock Analysis
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