* Plans to cut about 1,500 from workforce, close plants
* Adjusted earnings of $1.76 per share top Street view $1.55
* Shares rise to $74.85 in after-hours trading
By Jessica Wohl
Nov 8 Energizer Holdings Inc said on
Thursday that it would cut more than 10 percent of its
workforce, or about 1,500 people, as it tries to rev up results
in its battery business.
A restructuring at the company, which also makes Schick
razors, was in the works for months. In September, Energizer
said it planned to cut jobs and expenses but until Thursday it
had not disclosed details of the plan.
Energizer's shares soared to $74.85 in after hours trading
after dipping 22 cents during the regular session to $70.82.
This year, the company faced pressures including losing
shelf space for batteries at Walmart and stepped up competition
from larger rival Procter & Gamble Co's Gillette razors.
At the same time, it has been under constant pressure as popular
iPads, mobile phones and other electronic gadgets do not require
its kind of batteries.
"It is absolutely what the company has to do in the context
of declining market share, declining category growth in
batteries and much tougher competition," Sanford C. Bernstein
analyst Ali Dibadj said of the restructuring. "This is a
short-term Band-Aid, but going forward they're still stuck in
very difficult categories and positions in those categories."
Energizer's latest restructuring comes two years after
another effort to overhaul the battery business following the
decline in battery-powered devices and the battery category
during the Great Recession.
While there was some recovery in the battery category in
2010 and 2011, declines in devices that use batteries and the
battery industry resumed in the past year, CEO Ward Klein said
on a conference call.
"We think these slow but steady negative trends are here to
stay," said Klein, who the company credits with having an
integral role in introducing the Energizer Bunny back in 1989.
Energizer said it wants to streamline its lineup of
household products to allow it to focus on the core battery
Plans include closing or streamlining battery factories and
packaging facilities in the United States, Malaysia and Canada
and streamlining lights manufacturing in China.
Energizer expects pre-tax cost savings of about $200 million
from the restructuring, and said the majority of its charges
should be recorded within the next 12 to 18 months.
St. Louis-based Energizer is best known for its namesake
batteries. Its other products include flashlights, Eveready
batteries, Playtex tampons, and Banana Boat and Hawaiian Tropic
The details of the restructuring come after other household
products makers such as P&G, Colgate-Palmolive Co and
Kimberly-Clark Corp announced plans to trim their ranks.
Energizer was spun off from Ralston Purina Co in 2000. Since
then it has grown with the acquisitions of Schick Wilkinson
Sword, Playtex, the Edge and Skintimate shaving prep business
and American Safety Razor.
Energizer also said its profit rose to $117 million, or
$1.84 per share, in the fiscal fourth quarter ended on Sept. 30,
from $45.8 million, or 67 cents per share, a year earlier.
Earnings excluding items such as restructuring costs rose to
$1.76 per share from $1.10 per share and exceeded analysts'
average forecast of $1.55, according to Thomson Reuters I/B/E/S.
Sales of household products fell due in part to
hurricane-driven sales a year earlier, the loss of shelf space
at Walmart and continued weakness in the battery category.
Household product sales fell 3.7 percent on an organic
basis, which typically excludes acquisitions, divestitures and
foreign exchange. Organic sales of personal care items such as
razors were essentially flat.
Energizer forecast fiscal 2013 adjusted earnings of $6.75 to
$7.00 per share, with sales up in a low-single digit percentage
Personal care sales should rise at a mid-single digit clip
this year, while household products sales are expected to fall
at a low-single digit rate, the company said.
The forecast includes about $20 million in shipments related
to Superstorm Sandy and estimated pre-tax restructuring savings
of $25 million to $35 million. It does not include any potential
Energizer just declared its first quarterly dividend of 40
cents per share this week, payable in December. The payout
should continue at the current rate "for a while," said Klein.