James M. Kilts, chairman, president, and CEO of The Gillette Company, said that the personal care company is making excellent progress in its business turnaround, moving the company into the top tier of industry performers.
Mr. Kilts cited ongoing gains in key financial measures, strong franchise growth, and enhanced organizational capabilities as the drivers behind Gillette's significantly higher sales and record earnings performance in 2003.
"The company continues to expect to deliver 3- to 5-percent organic sales growth on a constant currency basis, as well as consistent growth in earnings per share," Mr. Kilts said about Gillette's future. "My confidence is high that our prospects for 2004 are excellent and that we have the programs and product pipeline for 2005 and 2006 that will build on our 2004 results," he added.
Mr. Kilts' comments were made during a presentation to some 500 financial analysts and institutional investors at the annual conference of the Consumer Analyst Group of New York.
Reviewing a number of areas of strong financial improvement, Mr. Kilts noted the Gillette's continued reductions in working capital as a percent of net sales, ongoing increases in operating profit margins, and substantial gains in return on invested capital -- up from 14 percent in 2000 to 28 percent in 2003.
He also discussed the growing strength of the company's franchises, as both new and established products, backed by significantly increased advertising investment, drove gains in sales, and market shares.
In the blade and razor business, Gillette increased global sales by 13 percent and boosted global market share to a record 72.5 percent -- despite new competitive entries, Mr. Kilts said. For 2004, he added that Gillette will continue to create growth with new products such as M3Power, a powered wet shaving system for men, and Venus Divine, its latest shaver product for women.
In batteries, Mr. Kilts attributed the improved performance in 2003 to lower everyday pricing, new advertising, and positioning and reduced costs. According to the company, Duracell maintains the leading share of market worldwide. Noting the unhealthy competitive actions that are deflating the battery category and eroding retail sales, Mr. Kilts reiterated Gillette's determination that Duracell's market share will not be allowed to decline.
He also described the benefits the company is deriving from its Functional Excellence initiative, a multi-year program to improve capabilities while reducing costs. "To date, Functional Excellence has taken more than U.S. $120 million in costs out of the system and upgraded our core capabilities," he said. "This year, we will put Functional Excellence to work to drive deeper and broader innovation throughout our organization."
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