The announcement was made during an investor call yesterday, and share prices are said to have spiked by almost 19% to $116.17 per share in premarket trading this morning, indicating that the financial world has had a positive reaction to the news.
The company says that the separation is expected to be finalized by the second quarter of financial year 2015, which could ultimately make the two companies a takeover target for investors.
For many industry experts the company’s two divisions have looked incongruous as part of the same operation, and it is widely thought that the split will give the two businesses better focus.
Personal care includes big brands
The household products division reported sales of $1.9bn in the 12 months up to March 31 this year, whereas the personal care unit had sales of $2.6bn for the same period on the back of brands such as Hawaiian Tropic sunscreen and Schick razors.
The announcement comes off the back of a dip in the company’s second quarter revenues, with sales down by 3.1% to $.1.06bn, which represented a fall in organic sales of 6.1%.
However, the company said that its net earnings were up from $84.9m to $98.5m, a figure that was mainly down from gains from cost savings on the back of its restructuring plan.
Razors and sunscreen...
However, the company’s personal care company has been performing significantly better than the household segment, with net sales up 5.6% during the quarter to $652m, and segment profit up 20.6% to $170.1m.
In organic terms personal care sales were down by 1.6%, a figure that was impacted by soft US sales in men’s razors, shave prep and the infant care segment.
The company did say that this performance was off-set by stronger revenues in its hydro franchise, as well as product innovation within its feminine care business.
The company said that looking ahead to the rest of 2014, it is predicting that personal care sales are likely to be flat in comparison to the figures achieved during 2013.