Energizer 2001 Annual Report Download - page 10

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WORLD MARKETS
Widely recognized the world over, our Energizer and Eveready branded
products are marketed and sold in more than 140 countries around the globe.
We manage operations in four primary geographic regions, with North America
and Asia Pacific representing a combined 77 percent of sales and 98 percent
of operating profit.
NORTH AMERICA: The key North America region, which includes the United
States and Canada, accounts for more than 57 percent of the company’s global
sales. For fiscal 2001, sales declined 14 percent due to lower sales volume
and unfavorable pricing and product mix. Operating profit decreased 34 percent
reflecting lower margins, partially offset by lower advertising and promotion costs.
Our product distribution improved with the addition of major new customers last
year, and the completed rollout of Eveready Alkaline with a major retailer gives
us a presence in more than 4,000 value discount stores nationwide. Our new
advertising campaign, with its forceful call-to-action for shoppers, is providing
powerful support for the Energizer e2and Energizer Max brands, while the
introduction of Energizer EZChange is expected to fuel significant gains in our
hearing aid business.
ASIA PACIFIC: The important Asia Pacific market accounts for 20 percent of
sales worldwide. Last year, sales slid 13 percent and operating profit declined
27 percent due to currency devaluation, lower sales volume of carbon zinc and
alkaline batteries in the region, and higher product costs.
Results in this region last year were affected by external events including
weaker currencies, slowing economies and shrinking battery markets in a
number of Asian countries.
EUROPE: Despite slightly higher alkaline battery volume, European sales slipped
4 percent for fiscal 2001 as a result of currency devaluation and unfavorable
pricing and product mix which was partially offset by higher alkaline volume.
This market accounts for 15 percent of the company’s global sales. Operating
profit improved to a slight loss resulting from currency devaluation partially
offset by higher sales, lower product costs, and lower advertising, promotion
and overhead expenses.
Improvements in supply chain efficiencies enabled us to better synchronize our
inventories with consumer purchases, and we improved our distribution with the
addition of new customers and an expanded product line.
SOUTH AND CENTRAL AMERICA: The region of South and Central America,
including Mexico, is the company’s smallest market and accounts for 8 percent
of global sales. Higher volume of alkaline batteries helped boost sales 5 percent,
while currency devaluation and higher marketing, distribution and product costs
led to a 26 percent decline in operating profit.
GLOBAL OPERATIONS
Energizer is one of the world’s largest manufacturers of dry cell batteries and
flashlights – manufacturing, marketing and selling products around the globe.
WORLDWIDE PRODUCTION COMPLEX:In support of its worldwide marketing
and sales efforts, Energizer operates manufacturing facilities in 12 countries on
four continents. We operate alkaline manufacturing plants in China, Singapore,
Switzerland and the United States (2); carbon zinc plants in the Czech Republic,
Egypt, Indonesia, Kenya, Malaysia, Philippines, Singapore and Sri Lanka; and
miniature battery plants in the United States. Together, these facilities produce
more than 5 billion battery cells each year. In addition, we operate lighting product
plants in China and the United States.
In light of the current global economic climate, we are placing renewed
emphasis on reviewing our operations and capacity worldwide, as well
as global trends and technological evolution. In 2001, we completed a
comprehensive evaluation of our facilities and, as a result, are in the
process of closing our carbon zinc production facility in Mexico and
realigning other production activities.
To further optimize operations, we are implementing an advanced automated
transportation management system in all of our manufacturing plants, distribution
centers and contract packing operations throughout the United States. This
sophisticated system, expected to be fully installed in the first half of 2002,
will include optimal load consolidation, routing, mode selection and carrier
assignment for shipment planning plus electronic load tendering and shipment
tracking. As a result, our customers will benefit through service-focused,
cost-effective execution of shipments.
BROAD RETAILER BASE: Energizer batteries and lighting products reach
consumers through a broad base of retailers that includes mass merchandisers,
warehouse clubs and dollar stores; supermarkets, drugstores and convenience
stores; hardware and home centers; department, toy and electronic specialty
stores; and military exchanges.
It is our singular purpose to be the battery and flashlight category expert for our
trade customers by delivering more than superior products. We provide category
management solutions and customer-focused programs that maximize customer
profitability and return on investment. We lead the industry with customer support
efforts that range from planning assistance and consultation, to promotional
advertising and in-store merchandising, to inventory and category management.
Our customer support extends to developing unique product and packaging
options that help retailers differentiate their stores from competitors. Last year,
we developed an Energizer 48 AA Pack and an Energizer Rechargeable Pack
for a major wholesale club, plus new lines of packages and offerings for leading
discount and home improvement retailers. Our package development process,
relying on collaboration among our global packaging resources, enables us to
go from concept to warehouse availability in less than three months.
RESEARCH AND DEVELOPMENT: Energizer is fully determined to retain and
reinforce its technological leadership in the primary battery business.This
long-held commitment is reflected in our investment of more than $46 million
in research and development in each of the last four fiscal years.