Personal care appliance maker The Gillette Company reported record net sales, profit from operations, net income, and diluted net income per share for the third quarter and first 9 months of 2004. The company said the strong results reflected excellent retail and consumer demand for Gillette's established products, strong interest in new offerings from its shaving, oral care, and personal care businesses, and heightened hurricane-related sales of its batteries in the U.S. The increase in profit resulted from trade-up to premium products in North America, Europe and developing markets, plus solid improvements in manufacturing productivity and reductions in overhead costs, Gillette said.
Net sales for the third quarter rose 12 percent to U.S. $2.69 billion from $2.41 billion in the third quarter of 2003. The company said favorable foreign exchange, primarily in Europe, contributed 4 percentage points of the net sales gain. Solid growth was posted in Europe and in developing areas, like Russia, Turkey, and Latin America, reflecting strength across core categories.
Profit from operations for the quarter rose 14 percent to $689 million from $604 million the previous year. Gillette said higher profit reflected solid sales growth, driven by increased investment in advertising, significant overhead savings and improved operational efficiencies.
Net income for the third quarter climbed 14 percent to $475 million from the prior year's $416 million, fueled by the strong operating results, lower net interest expense, and a lower effective income tax rate, which decreased 1 percentage point from a year ago to 29 percent, the same as the prior six months.
Diluted net income per common share rose 15 percent to $0.47, up from $0.41 a year ago.
For the 9 months, net sales grew 11 percent to $7.37 billion, compared with $6.63 billion in 2003. Favorable foreign exchange, notably in Europe and Asia, contributed 5 percentage points of the net sales advance.
Profit from operations for the first nine months climbed 25 percent to $1.86 billion from $1.49 billion in the previous year. Net income for the nine months was $1.28 billion, up 26 percent from $1.02 billion last year, or an increase of 27 percent to $1.26 from $0.99 in diluted net income per share.
"Our momentum is strong," said James M. Kilts, chairman, president, and CEO. "Our record third-quarter and 9-month results reflect the strong performance of our existing products plus the largest introduction of new products in recent years, including the successful launches of the M3Power and Venus Divine premium shaving systems, the dentist-inspired Professional Care 8000 power toothbrush, the Sonic Complete rechargeable toothbrush."
Results by segment include the following:
Duracell net sales for the quarter rose 15 percent to $592 million from $514 million for the same quarter last year, and profit from operations increased 52 percent to $161 million from $106 million for the same period in 2003.
Oral Care net sales for the quarter increased 27 percent to $418 million from $328 million for last year, and profit from operations was $62 million, down from $64 million.
Braun net sales for the quarter increased 9 percent to $320 million from $293 million for the third quarter of 2003, and profit from operations was $22 million, even with a year ago.
Personal Care net sales for the quarter grew 7 percent to $253 million from $236 million for the corresponding period in 2003, and profit from operations rose 31 percent to $34 million from $26 million last year.
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