Energizer 2004 Annual Report Download - page 4

To Our Shareholders:
Last year, we achieved substantial progress in our complementary
Energizer and Schick-Wilkinson Sword businesses, introducing innovative
new products and investing aggressively in our brands. We successfully
integrated the shaving business acquired in mid-2003, benefitting from our
compatible cultures and collective management depth. Entering fiscal
2005, we are confident of our strengths and comfortable with what we
are and where we are.
FY 2004 Financial Results
For our fiscal year ended September 30, 2004, Energizer’s net earnings
climbed to $267.4 million, a 17 percent increase over net earnings of
$228.2 million the previous year, and earnings per share reached $3.21,
an increase of 24 percent over $2.59 the year before.* Net sales, reflect-
ing the full-year inclusion of Schick-Wilkinson Sword and higher battery
sales, rose 26 percent to $2.8 billion from $2.2 billion the prior year.
Share Repurchase Progress
Energizer’s strong balance sheet and cash flow continue to provide the
resources to take advantage of opportunities.
In August 2004, the Board of Directors issued a new authorization for the
company to acquire up to 10 million shares of common stock, replacing
a similar authorization approved in January 2004. During fiscal 2004,
we repurchased a total of nearly 13.4 million shares, leaving 8.2 million
shares remaining under the current authorization at year-end.
Our 2004 fiscal year, Energizer Holdings’ fourth
as a stand-alone company, was a year of continued
growth and strong performance as we built on the
momentum from the prior year. As captured in the
theme of this report, it was certainly a year in which
we kept going … and kept growing.
During this past year, we have confirmed what we’re good at – managing relatively large international
brands, like Energizer
®
and Eveready
®
,like Schick
®
and Wilkinson Sword
®
. We see ourselves as a quality
company doing its best with the businesses it manages. This is where we feel most comfortable and
confident.There’s no primer 101 for running a company like Energizer. We read the situation and
respond with appropriate action to maximize long-term shareholder value.
J. PATRI CK MULCAHY, CHIEF EXECUTIVE OFFICER, ENERGIZER HOLDINGS, INC.
ENR 2004 Annual Report
2
In the four fiscal years from October 2000 through September 2004, we
have repurchased a total of 26.0 million shares at an average price of
$33.20 – representing 27 percent of our outstanding shares at October
2000.We consider investing in ourselves and our company’s future to
be a sound financial strategy, one that rewards long-term shareholders
by increasing the value of remaining shares.
(See chart, below right.)
The use of cash flow for share repurchase remains situational. Acquisitions
of other businesses is an equally viable alternative for our cash flow, and
we continue to seek attractive opportunities to further leverage our global
distribution capabilities. Simply put, we would love to find another Schick-
Wilkinson Sword.
Complementary Businesses
With the acquisition of Schick-Wilkinson Sword (SWS) in March 2003,
Energizer today operates two strong, complementary global businesses,
each boasting a pair of widely recognized, world-class brands and compre-
hensive product portfolios.
While solidly positioned in separate categories of consumer packaged
goods, our battery and shaving operations share many striking similarities
– from manufacturing processes, distribution channels and common cus-
tomers to long-standing commitments to product quality and technological
innovation.We continue to leverage these capabilities and synergies, build-
ing on each business’ success.
Our battery and shaving businesses both achieved healthy top-line growth
in fiscal 2004, and segment profit improved nicely. However, there is
an ongoing negative price mix due to a channel shift from food and drug
stores to merchandisers selling larger pack sizes. Sales growth in our
Razors and Blades business came primarily from growing consumer
acceptance of our new men’s and women’s shaving systems, Schick-
Wilkinson Sword
QUATTRO
®
and Intuition
®
, as well as expansion of the
SWS line in additional parts of Asia and Europe.