Rayovac 2009 Annual Report Download - page 53

Table of Contents
Index to Financial Statements
Global Batteries & Personal Care
2009 2008
(in millions)
Net sales to external customers $1,335 $1,494
Segment profit $ 165 $ 163
Segment profit as a % of net sales 12.4% 10.9%
Assets as of September 30, $1,608 $1,183
Segment net sales to external customers in Fiscal 2009 decreased $159 million to $1,335 million from $1,494 million during Fiscal 2008, representing
an 11% decrease. Unfavorable foreign currency exchange translation impacted net sales in Fiscal 2009 by approximately $118 million in comparison to
Fiscal 2008. Consumer battery sales for Fiscal 2009 decreased to $819 million when compared to Fiscal 2008 sales of $916 million, principally due a
negative foreign currency impact of $70 million coupled with a decline in zinc carbon battery sales decline of $32 million. The $32 million decrease in zinc
carbon batteries is primarily concentrated in Latin America, as Latin American sales were down $35 million in Fiscal 2009 compared to Fiscal 2008 as a
result of a slowdown in economic conditions and inventory de−stocking at retailers mainly in Brazil. Excluding foreign exchange, sales of alkaline batteries
increased $5 million as we experienced gains in North America of $37 million, which were offset by declines within Europe and Latin America of $17
million and $15 million, respectively. The increased alkaline battery sales in North America were driven by an increase in market share, as consumers opt
for our value proposition during the weakening economic conditions in the U.S. The decreased alkaline battery sales in Europe were the result of our
continued efforts to exit from unprofitable or marginally profitable private label battery sales, as well as certain second tier branded battery sales. We are
continuing our efforts to promote profitable growth and therefore, expect to continue to exit certain low margin business as appropriate to create a more
favorable mix of branded versus private label products. The decrease in Latin American alkaline battery sales was again due to the slowdown in economic
activity coupled with inventory de−stocking at retailers mainly in Brazil. Net sales of electric shaving and grooming products in Fiscal 2009 decreased by
$21 million, or 8%, primarily as a result of negative foreign exchange impacts of $19 and declines in North America of $7 million. These declines were
partially offset by increases within Europe and Latin America of $3 million and $2 million, respectively. The declines within North America are primarily
attributable to delayed inventory stocking at certain of our major customers for the 2009 holiday season which in turn has resulted in a delay of our product
shipments that historically would have been recorded during the fourth quarter of our fiscal year. We anticipate the first quarter sales of Fiscal 2010 to be
positively impacted versus our historical results due to this delay. The slight increases in Europe and Latin America are a result of successful new product
launches. Electric personal care sales decreased by $20 million, a decrease of 9% over Fiscal 2008. Unfavorable foreign exchange translation impacted net
sales by approximately $24 million. Excluding unfavorable foreign exchange, we experienced an increase of $4 million within electric personal care
products. Europe and Latin America increased $8 million and $3 million, respectively, while North American electric personal care product sales decreased
$8 million. Similar to our electric shaving and grooming products sales, the decreased sales of electric personal care products within North America was a
result of delayed holiday inventory stocking at certain of our customers which in turn has resulted in a delay of our product shipments that historically
would have been recorded during the fourth quarter of our fiscal year. The increased sales within Europe and Latin America were due to strong growth in
our women’s hair care products. Net sales of portable lighting products for Fiscal 2009 decreased to $80 million as compared to sales of $100 million for
Fiscal 2008. The portable lighting product sales decrease was driven by unfavorable foreign exchange impact of $5 million, coupled with declines in North
America, Europe and Latin America of $9 million, $3 million and $2 million, respectively. The decrease across all regions was driven by softness in the
portable lighting products category as a result of the global economic slowdown.
Segment profitability in Fiscal 2009 increased slightly to $165 million from $163 million in Fiscal 2008. Segment profitability as a percentage of net
sales increased to 12.4% in Fiscal 2009 as compared with 10.9% in Fiscal 2008. The increase in segment profitability during Fiscal 2009 was primarily the
result of cost savings
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