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Gillette Announces 2003 Q4, Full-Year Earnings
Jan 29, 2004
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The Gillette Company, headquartered in Boston, MA, U.S., has announced its 2003 full-year and fourth-quarter results.

For the year, Gillette reported record earnings per share on the strength of solid growth in net sales and double-digit percentage increases in profit from operations and income from continuing operations. Strong new and established product performance and portfolio-wide marketing investments drove the gains despite heightened competition and costs related to a manufacturing realignment in Europe, according to the company.

For the third consecutive year, the Gillette Blade and Razor business generated a new record global market share, reflecting the continued growth of its Mach3Turbo and Venus premium systems and its new Sensor3 premium disposable razor. In Batteries, strong sales growth and exceptional profit gains were achieved, as Duracell reduced its prices, cut promotional activity, and lowered its manufacturing costs.

For the year, net sales rose to U.S. $9.25 billion, an increase of 9 percent from $8.45 billion in 2002, as strong marketing programs fueled the growth of both new and established products. Solid-volume gains and favorable product mix accounted for 4 percentage points of net sales growth. Favorable foreign exchange, chiefly in Europe, contributed 5 percentage points of the increase.

Profit from operations for the year 2003 climbed to $2 billion, 11 percent above the previous year, driven by sales growth from new products, ongoing trade-up to premium shaving systems and disposables, and savings from cost-elimination programs.

Income from continuing operations for the year rose to $1.38 billion, 14 percent higher than the prior year. Net income for the year was $1.39 billion, a 14 percent increase from $1.22 billion in 2002.

Diluted net income per common share from continuing operations climbed 18 percent, to $1.34, compared with $1.14 a year ago. Diluted net income per common share was $1.35, a 17 percent increase from $1.15 in 2002.

For the quarter, net sales rose 4 percent to $2.62 billion from $2.53 billion in the fourth quarter of 2002. Sales growth for the quarter was tempered by advance shipments of razors in the third quarter for holiday programs and weak demand for Braun and power oral care products in Europe, which was offset by favorable foreign exchange of 7 percent.

Profit from operations for the quarter was $514 million, compared with $510 million in the prior year, reflecting an ongoing mix shift to more profitable premium shaving systems, and cost savings from sourcing and manufacturing efficiencies that funded higher investment in advertising and offset a $50 million provision to realign European blade and razor manufacturing.

Income from continuing operations increased 6 percent to $358 million, compared with $339 million in the prior year. Net income for the quarter was $368 million, a 6 percent increase from $346 million in 2002. Diluted net income per common share from continuing operations of $0.35 grew 9 percent, from $0.32 in 2002. Diluted net income per common share was $0.36, a 9-percent increase from $0.33 in 2002.

"Our turnaround momentum accelerated last year," James M. Kilts, chairman, president and CEO of Gillette, said in a written statement from the company that announced these earnings. "Our record earnings came in the face of heightened competition in our key categories, which we met with very successful new products, re-energized established brands and innovative marketing programs.

"We said that despite new competitive entries in blades and razors, we would grow our franchise strongly and reach our overall financial targets ... and that is exactly what we did," Mr. Kilts continued. "Importantly, we continue to strengthen our financial performance by further reducing costs, improving our asset management and increasing the return on capital through extending the lifecycle of our technology- and performance-based products in blades and razors, oral care and dry shaving."

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