Energizer Holdings Inc. (ENR), said Tuesday its third quarter profit increased from last year, helped by strong cost reductions, which offset lower sales and unfavorable impact of currency. In addition, Energizer Holdings said it plans to cut jobs in the Household Products business in order to reduce overhead cost structure.
The company posted net earnings of $72.7 million or $1.13 per share for the third quarter, compared to $66.7 million or $1.13 per share in the prior year quarter.
On average, 11 analysts polled by Thomson Reuters expected the company to earn $1.03 per share for the third quarter.
Energizer noted that the recently completed equity offering resulted in higher shares outstanding, which resulted in a $0.10 reduction in earnings per share. The result for the quarter included a favorable adjustment of $0.7 million or $0.01 per share, net of tax, while last year's third quarter included an after-tax expense of $1.9 million or $0.03 per share, related to Playtex integration costs and a $4.0 million or $0.07 per share expense for income taxes , to adjust prior year tax accruals.
Third quarter total net sales declined 6% to $997.5 million from $1.1 billion in the same quarter last year. On a constant currency basis, sales decreased $5 million or less than 1%. Eight analysts had a consensus revenue estimate of $1.00 billion for the third quarter
Ward Klein, chief executive officer of Energizer, said, "Net earnings for the quarter and year-to-date continue to hold up despite volume shortfalls in batteries, currency headwinds across all businesses and an overall globally weak consumer environment. This positive financial performance is due in part to our continued focus on innovation, strong overhead and spending cost reductions, and on-going deleveraging of our balance sheet."
Net sales in the Household Products division decreased 13% to $468.0 million, but dropped 6% on aon a constant currency basis, as lower sales volume was partially offset by favorable pricing and product mix.
Net sales in the Personal Care business remained flat at $529.5 million. On a constant currency basis, however, net sales increased 5% for the quarter due to increases in all product lines.
As a percentage of sales, gross margin decreased 180 basis points, due to the unfavorable impact of currencies. Excluding currencies, gross margin was 47.9%, up 20 basis points over a year ago.
Energizer noted that its battery category has experienced declines recently, as a result of which its board approved a restructuring plan to reduce the overhead cost structure mainly in the Household Products business, as well as right-size manufacturing and sales operations in light of market uncertainties.
The plan includes an offer of a voluntary enhanced retirement severance package to certain eligible hourly and salaried U.S. employees, and the elimination of additional positions as part of a limited involuntary reduction in force.
Energizer expects to incur restructuring costs in the range of $22 million to $28 million, consisting primarily of one-time termination benefits. The majority of the costs are expected to be recorded in fiscal year 2009, although some charges may occur in early fiscal 2010.
The majority of the reorganization will be completed by the first quarter of fiscal 2010. Once completed, annualized savings are estimated to be in the range of $15 million to $18 million.
On May 15, Energizer completed an equity offering of 10.93 million shares at $49.00 per share, resulting in net proceeds of $510.2 million.
Also, in the quarter, the company completed the acquisition of the Edge and Skintimate shave preparation business for about $275 million, of which about $12 million has been allocated to acquired inventory.
In addition, the company estimates that the present value of tax benefits related to the assets acquired will be about $48 million. The company based its valuation on $150 million of annual sales with $25 million to $30 million in post-integration EBITDA. Results for the shave preparation business for the period from the date of acquisition were immaterial to the quarter.
For the nine-month period of 2009, Energizer reported net earnings of $260.7 million or $4.29 per share, compared to $230.2 million or $3.90 per share in the previous year period.
Net sales dropped 9% to $2.92 billion from $3.21 billion in the prior year period. On a constant currency basis, sales decreased by 3%.
Looking ahead, Klein said, "In the near-term, we expect a difficult fourth quarter comparison due to hurricane-related and early holiday season shipments last year."
For the full year, Energizer estimates the total unfavorable currency impact to be about $120 million.
Energizer is currently trading at $60.96, up $1.79 or 3.03%.
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June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.