Gillette's Profit Boosted by Battery Sales

Gillette Co. (G) said Thursday its third-quarter profit rose 14 percent as customers traded up to its premium-line shaving and dental care products and it sold more Duracell batteries (search) due to the recent hurricanes.

Gillette's performance beat Wall Street's forecast as the company also reported gains from improvements in manufacturing productivity and reduced overhead costs.

The company reported net income for the July-September period of $475 million, or 47 cents per share, compared with a profit of $416 million, or 41 cents per share, in the same quarter a year ago. Net sales rose 12 percent to $2.69 billion from $2.41 billion a year ago, with about one-third of the increase attributed to favorable currency exchange rates, primarily in Europe.

The per-share profit of 47 cents beat by 4 cents the consensus estimate of analysts surveyed by Thomson First Call.

Gillette shares were up $1.57, or 3.9 percent, at $41.49 on the New York Stock Exchange (search).

Boston-based Gillette, which has recently boosted its advertising investment, said customers were increasingly switching to higher-end products the company has introduced this year including the M3Power razor (search). The product, which features a battery-powered motor that emits pulses to stimulate hair away from the skin, was launched in May with a campaign that included heavy television advertising and celebrity shaving publicity stunts.

Sales of blades and razors rose 7 percent in the third quarter to $1.11 billion, compared with $1.03 billion a year ago.

Duracell battery sales increased 15 percent to $592 million from $514 million a year ago. Five storms hit Florida and other parts of the Southeast during the quarter, increasing battery demand.

Sales of Oral Care products posted a 27 percent gain to $418 million from $328 million a year ago, with the acquisitions of Rembrandt teeth whitening products and Zooth children's toothbrushes contributing to the gain.

"Our momentum is strong," said James M. Kilts, Gillette's chairman, president and chief executive. "We look forward to very strong results for the year, which should position us for another solid year in 2005."

Gillette did not offer a forecast of future earnings.

In its second-quarter report, Gillette had warned that weakening consumer confidence in western Europe could offset strong sales growth in countries such as Russia, Turkey and Eastern Europe.

On Thursday, however, Gillette said it posted solid growth during the third quarter in Europe as well as in developing areas like Russia, Turkey and Latin America.

For the first nine months of the year, Gillette earned $1.28 billion, or $1.26 a share, up from $1.02 billion, or 99 cents a share, a year ago. Nine-month revenue rose to $7.37 billion from $6.63 billion a year ago.