Energizer sets dividend; profit tops expectations

Wed May 2, 2012 10:40am EDT

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(Reuters) - Energizer Holdings Inc's (ENR.N) quarterly profit beat Wall Street estimates as the household products maker benefited from price increases, and it announced its first dividend, sending its shares up more than 7 percent on Wednesday.

The maker of Energizer and Eveready batteries and Schick razors posted a higher profit for the second quarter ended on March 31 as restructuring efforts and new products helped it offset some higher commodity costs.

Energizer expects to start paying a quarterly dividend of 40 cents per share in the fourth quarter, which ends in September. Its board also approved the repurchase of up to 10 million common shares.

"This will give the company a roughly 2.3 percent yield, in line with its peer average, and could attract a new class of investors to the name," SunTrust Robinson Humphrey analyst William Chappell wrote in a note to clients.

Energizer said it had earned $77.9 million, or $1.17 per share, in the second quarter, up from $39.1 million, or 55 cents per share, a year earlier.

Excluding special items, Energizer earned $1.22 per share, beating the analysts' average forecast of $1.08, according to Thomson Reuters I/B/E/S.

Sales rose 6.4 percent to $1.1 billion, led by 7 percent "organic" growth, which typically excludes acquisitions, divestitures and foreign exchange.

"This was the fastest organic growth for the company in recent memory, driven by improved pricing in batteries ... and continued strong performance in the Hydro (razor) franchise," Chappell wrote.

Energizer also warned on Wednesday that this quarter's profit would fall as it promotes new products and raises battery prices.

The company said it still expected to earn $6.00 to $6.20 per share in fiscal 2012. Third-quarter earnings per share should fall from a year earlier due to promotional spending and because some retailers stocked up on batteries in the second fiscal quarter ahead of a U.S. price increase.

"At first glance this may seem disappointing," Chappell said. "However, as this is only the second year in which Energizer is providing guidance at all, the company may well be taking a conservative approach."

Analysts on average expect Energizer to earn $1.54 per share this quarter and $6.10 this year.

Energizer also named former Clorox Co (CLX.N) Chief Financial Officer Daniel Heinrich to its board.

The company's shares were up 7.5 percent at $76.17 in morning trading.

(Reporting by Jessica Wohl and Nivedita Bhattacharjee in Chicago; Editing by Lisa Von Ahn)

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