* Q1 EPS $2.21 excluding charges vs Street view $1.84
* Sales rise 12.9 pct to $1.18 bln; Street view $1.14 bln
* Cautious on year, especially in battery business
* Shares down 1.9 pct after falling 4.3 pct
(Adds analysts' forecast, updates stock move)
By Jessica Wohl
CHICAGO, Jan 26 Energizer Holdings Inc's
(ENR.N) quarterly profit and sales rose more than expected, but
its shares slid as the company remained cautious about the rest
of the year, particularly in its namesake battery business.
It was a strong quarter, "especially in light of the
stagnant consumer environment," Chief Executive Ward Klein said
in a statement.
Analysts, however, were disappointed that the
better-than-expected profit stemmed largely from reduced
spending on advertising and promotions, after the company said
months ago that it would raise such spending this year.
Energizer's batteries, Schick razors and Playtex tampons
compete against the Duracell, Gillette and Tampax products sold
by Procter & Gamble Co (PG.N), which has also stepped up its
Sales climbed 13 percent to $1.18 billion, topping
analysts' average forecast of $1.14 billion.
In the household products segment, which includes
batteries, sales rose 9 percent. Consumers' purchases of
batteries remain sluggish and Energizer said it was hard to
tell what impact the economic downturn was having on trends.
The company's take on batteries does not seem "materially
different" than last quarter, JP Morgan analyst John Faucher
said, calling it "cautious, but not panic inducing."
Both Energizer and P&G's Duracell have been promoting
products to drive purchases. This week, for example, one
grocery store circular has a coupon for $2 off a pack of either
Sales of Energizer's personal care items jumped 20 percent,
boosted by the June acquisition of the Skintimate and Edge
shaving gels and creams business. But sales of tampons slid 12
percent, due to a drop in sales of the Gentle Glide products.
Energizer's shares were down 1.9 percent at $58.02 after
falling as low as $56.55. P&G slipped 0.2 percent to $60.51.
ADVERTISING SPENDING STILL TO COME
In early November, Energizer said it expected to post low
double-digit growth in earnings, excluding one-time items, in
fiscal 2010, as it increases advertising and promotional
spending to about 12 percent of sales.
Such spending fell to 7.5 percent of sales in the latest
quarter, down from 9.3 percent a year earlier.
BMO Capital Markets analyst Connie Maneaty had expected
advertising and promotion spending at 12 percent of sales in
the quarter. She said the lower-than-anticipated rate added 50
cents per share to the company's profit.
Energizer said it still plans for spending of around 12
percent this year, and did not update its earnings forecast.
Energizer earned $125.7 million in the fiscal first quarter
that ended Dec. 31, up from $111.0 million a year earlier.
Earnings per share fell to $1.78 from $1.88 because of an
increase in shares outstanding after a May 2009 equity
The latest quarter included a charge of 36 cents per share
related to Venezuela's currency devaluation, and other charges
totaling 7 cents per share. Excluding those items, Energizer
earned $2.21 per share, well ahead of analysts' average
forecast of $1.84, according to Thomson Reuters I/B/E/S.
The change in the Venezuelan currency exchange rate was
expected to cut an additional $5 million to $7 million from
operating profit this year, on top of a hit of $15 million to
$20 million Energizer already expected due to the use of a
separate exchange rate for imports in Venezuela.
Energizer also said it expects to record a tax benefit of
about $5 million during the current quarter related to the
Venezuelan devaluation charge it has already taken.
(Reporting by Jessica Wohl, editing by John Wallace and