Energizer profit rises, surprising Wall Street

Energizer Holdings Inc. posted a surprising increase in quarterly profit on Tuesday as a favorable tax adjustment offset increased costs.
The company, known for its namesake batteries and Schick razors, is working on broadening its consumer products lineup with the planned $1.16 billion purchase of Playtex Products Inc. announced earlier this month.
Earnings rose to $62.5 million, or $1.06 per share, in the fiscal third quarter ended June 30, from $51.3 million, or 83 cents per share, a year earlier.
Energizer said in April that earnings should fall as it spent more to advertise and promote its products. Analysts on average expected a profit of just 81 cents per share, according to Reuters Estimates.
The company benefited from a favorable adjustment of $7.8 million, or 13 cents per share, related to previously unrecognized tax benefits. Higher battery prices, put in place in January, also helped to offset significant increases in costs for materials such as zinc.
Sales rose 8.9 percent to $800 million.
Sales of men's razors and blades slowed down compared to recent quarters, when Energizer launched more new products, Chief Executive Ward Klein said in a statement.
The company is also feeling pressure from larger rival Procter & Gamble Co.'s Fusion razor brand.
Still, Klein said disposable products, such as the Quattro razor that debuted in the second quarter, led to razor and blade sales growth. He expects the shaving business to show a strong end to the fiscal year.
Energizer said it expects $20 million to $22 million in additional product costs in the fourth quarter versus a year earlier but said price increases in place in most markets should offset most of those higher costs. Shares of Energizer trade at nearly 18.7 times next year's expected earnings, while P&G trades at a multiple of 18.2, according to Reuters data.
Energizer and P&G currently compete in razors and batteries. If Energizer buys Playtex, they will also compete in the feminine care category, where Playtex tampons go against P&G's Tampax brand.