Gillette's strong outlook backed up by financial market

Related tags Oral care Economics Debt

Gillette has received the thumbs up from market analysts, with its
strong financial performance leading to the company's credit rating
being upgraded by Moody's Investors Services to 'positive'.

The US-based company, which produces a range of shaving-related and oral products, released strong third quarter figures at the end of October that have helped instill greater confidence from the investment market.

Net sales for the first nine months of the year were up 11 per cent to $7.37 billion, whilst profits climbed by 25 per cent to reach $1.86 billion. The rate of improvement was even stronger for the third quarter, which the company said resulted from a trade-up to premium products in North America and Europe, combined with improvements in manufacturing productivity and reductions in overheads.

Considering the results and a stronger outlook, analysts at Moody's said that the upgrade reflected the success of the company's cost saving initiatives as well as increasing its market share and the successful introduction of new product lines.

However, challenges still lie ahead for the company, and this is reflected by Moody's move to affirm the company's debt rating of 'Aa3' and its short-term rating of 'Prime 1'.

Moody's said that the company's reliance on its blades and razors division meant that it would have to make continued operating improvement in that division if the other ratings were to be upgraded.

Currently around 35 per cent of the company's turnover is related to personal care and oral care products, with the mainstay remaining blades and razors and its Duracell battery division bringing up the rear. The market for oral care is particularly strong at the moment, reflecting new products and the acquisition of Rembrandt and Zooth. In the personal care division growth has proved solid at around 7 per cent, but the US market continues to prove challenging.

In reaction the upgrading shares in Gillette​ have continued to rise steadily and were up 0.33 cents to $45.43 when trading ended in New York yesterday.

Related topics Business & Financial

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