Gillette reports record second quarter results
The Gillette Company today reported record net sales, profit from operations, net income and diluted net income per share for the second quarter and first six months of 2004.
These were spurred by strong sales of its new products, accelerated growth in emerging markets, ongoing cost savings and increased manufacturing productivity.
Net sales for the second quarter rose 8% to US$2.44bn (€2bn) from US$2.25bn (€1.85bn) in the second quarter of 2003.
Favorable foreign exchange, primarily in Europe, contributed 2 percentage points of the net sales gain.
Double-digit percentage sales growth in the US was fueled by the strong sell-in of M3Power, Gillette’s new premium shaving system, and several new Oral Care and Personal Care products, including the Oral-B Hummingbird power flosser, Brush-Ups teeth wipes and the Gillette Complete Skincare line of premium products for men.
Very strong growth also was posted in Russia, Turkey and Eastern Europe, resulting from strength in all core categories.
Gillette’s growth was moderated in several Western European markets as consumer spending slowed across consumer staple categories.
Profit from operations for the quarter rose 21 percent to US$610m from US$505m the previous year.
The higher profit reflected solid sales growth, driven by an increased investment in advertising, favorable business mix and overhead savings.
Net income for the second quarter climbed 26 percent to US$426m (€504m) from the prior year’s US$338m (€279.3m), fueled by the strong operating results, lower interest expense and a lower effective income tax rate, which decreased 1 percentage point to 29%.
Diluted net income per common share rose 27 percent to 42 cents, up from 33 cents a year ago.
For the six months, net sales grew 11 percent to US$4.68bn (€3.9bn), compared with US$4.23bn (€3.5bn) in 2003.
Favorable foreign exchange, primarily in Europe and Asia, contributed 5 percentage points of the net sales advance.
Profit from operations for the first six months climbed 32% to US$1.17bn (€966m) from US$885m (€731m) for the previous year.
Net income for the six months was US$802m (€662m), 33 percent above the US$601m (€496m) last year, or an increase of 36 percent to 79 cents from 58 cents in diluted net income per share.
“Our second-quarter and six-month results underscore Gillette’s movement from turnaround to sustainable growth. This is reflected in the strength of our company-wide new product introductions, and the continued solid performance of our established brands,” said James M. Kilts, chairman, president and chief executive officer.
“We have good new product momentum. Trade acceptance of our M3Power shaving system has exceeded historic norms with more than 100,000 displays shipped to retailers within four weeks of its launch, which made M3Power the top-selling shaving system in the U.S. during its first full month of availability.
“In Oral Care, Hummingbird and Brush-Ups are creating the consumer trial we anticipated to extend Oral-B’s reach beyond toothbrushes. Our acquisitions in the quarter of Rembrandt in the premium whitening segment and the Zooth line of children’s toothbrushes also are increasing our presence in oral care,” Mr. Kilts said.
He noted that Gillette’s ongoing initiatives to improve manufacturing productivity and reduce overhead costs are supporting increased levels of marketing.
“Our powerful marketing programs are fueling new sales and consumer trade-up to premium products, even in the face of competitive offers of steep discounts and product giveaways.
“Overall, 2004 will be a very strong year,” he said.
