Energizer 2006 Annual Report Download - page 5

ENR 2006 ANNUAL REPORT 3
Focus on Strategies
To overcome these competitive pressures and market forces, we
continue to focus on the proven strategies we have in place and on our
mission of delivering portable power and wet shave solutions to
consumers and trade customers better than anyone else – something
we do by intensely focusing on innovation and cost discipline.
Batteries and Lighting Products. The battery category remains healthy
and Energizer is best positioned in the growing parts of the market. U.S.
households currently own 2.2 billion battery-powered devices, a number
projected to continue growing 8 percent annually – and one-fourth are
high-drain devices. We continue to follow clearly defined strategies to
build sales and share in our Batteries and Lighting Products segment.
1. Broad Portfolio – Offering the broadest range of portable power solutions gives
us multiple opportunities to meet diverse consumer and customer needs with
a strong platform to trade up consumers to more premium products.
2. Brand Support – Brands matter in the battery category, and we aggressively
support our well-known Energizer®and Eveready®brands with meaningful
advertising and promotional support.
3. Minimize Overhead – A lean overhead structure enables us to fund our brand-
building efforts, while delivering healthy operating margins and generating
strong cash flow.
Razors and Blades. In the Razors and Blades segment, our proven
strategies produced record profits last year and have fueled a com-
pounded annual sales growth of 8 percent over the past three years.
1. Encourage Trade-Up – Through continuous product innovation and strong
brand support, we seek to trade up consumers to new improved products
in each area where we compete – men’s and women’s wet shaving systems
and disposables.
2. Geographic Expansion – We continue to expand the global presence and
sales of Schick-Wilkinson Sword (SWS), introducing shaving solutions in
more countries and classes of trade where we currently market batteries.
3. Minimize Overhead – Low overhead cost allows us to fund brand-building
programs and improve operating margins.
Focus on Innovation
Creatively focusing on innovation in products and technology, Energizer
is able to compete successfully against larger rivals. Examples of
innovation are numerous across our battery and blade businesses –
from the world’s first four-bladed razor and first all in one razor to the
only battery line harnessing the power of lithium in a 1.5 volt cell, from an
akaline battery with patented titanium technology to advanced titanium
blade-coating technology, from the world’s only hearing aid battery
dispenser to the proprietary intelligent power management technology
in our new cell phone charger.
Focus on Cost Containment
While introducing innovative new products and building our brands,
we maintain an equally intent focus on continuous improvement across
our manufacturing operations. Our goal is to drive non-value added
activities out of all business processes.
Lean transformation. Focusing on cost containment throughout
the organization, our lean transformation continues to gain traction.
The essence of our lean initiative, which has totally transformed our
battery manufacturing over the last three years, is to focus on things
that add the most value to customers and consumers, and eliminate
the least important. These efforts have resulted in significant cost savings
over the past three years, helping offset the impact of rising material
and fuel costs.
European restructuring. A major cost-reduction effort is under way to
streamline our commercial structure in Europe and use our resources
more efficiently. The initial phase, restructuring of our European supply
chain, was substantially completed in the fourth quarter of 2006 at a total
cost of $24.1 million, pre-tax, and is expected to produce annual cost
savings of approximately $6 million beginning in fiscal 2007. Currently,
we are combining our battery and blade commercial management,
sales and certain support functions within selected countries. This
phase is expected to cost $27-$33 million, of which $13.3 million
was recognized in 2006. Once fully implemented, annual cost savings of
$15-$20 million are expected.
Outlook for the Future
All around the world, Energizer colleagues continue to achieve excep-
tional results. This highly experienced and talented team is passionate
about delivering portable power and wet shave solutions – and energized
about doing it better than anyone else. Our team-oriented, small-
company culture, world-class brands and global distribution system – and
our collective focus on innovation and cost control – continue to be a
profitable combination for our long-term shareholders.
Ward M. Klein
Chief Executive Officer
Energizer Holdings, Inc.
November 15, 2006
Apr 00 Apr 01 Apr 02 Apr 03 Apr 04Oct 00 Oct 01 Oct 02 Oct 03 Oct 04
$300
$100
$200
Energizer
S&P 400
S&P 500
Apr 05 Apr 06Oct 05 Oct 06
Stock Price Performance
Comparison of Cumulative
Total Return on $100 invested
in Energizer Holdings, Inc. on
its first day of trading, April 1,
2000, versus the S&P 500 and
S&P 400 Mid Cap Indices
through September 29, 2006.