Energizer announces restructuring aimed at saving up to $200m
The restructuring, which targets the company’s entire business, aims to streamline the operations, reduce the global workforce, reduce overhead spending and make significant procurement savings.
Ultimately the company believes the strategy will help to drive longer-term growth in both its household businesses, which is concentrated on its namesake household batteries business, as well as its diversified personal care business.
Specifically the cost restructuring exercise should serve to generate increased cash flow, in turn enabling the company to increase investment in brand building and innovation as a means of securing future growth.
Supporting growth for personal care
"While the detailed work continues, we believe the preliminary assessment has identified the actions needed to support our long-term strategy to maximize cash flow in Household Products, support growth in Personal Care and drive shareholder value," said Ward Klein, Energizer CEO.
"We believe these initiatives will deliver substantial value for shareholders, and we will pursue these initiatives with urgency and focus, while establishing a framework to provide transparency and accountability. We are committed to improving our cost structure and operational performance while increasing our investments in brand building, innovation and category development."
The company says that it anticipates ‘modest benefits’ from the plan will be reflected in the first half of fiscal 2013, while the most substantial part of the improvements will be reflected in the financial reporting for the fiscal 2014.
Final version of restructuring plan to be announced
Likewise, a final version of the restructuring plan will be made public by the board of directors, detailing the timing of the savings and the related costs in its final year-end earnings release and conference call on November 9.
The company has also estimated that the costs for the restructuring will mean a one-time charge of 1.25 times the gross annualized savings.
The restructuring plan comes in the light of falling group sales for the company in recent quarters, which have been underlined by falling revenues in both the household and personal care business divisions.
Restructuring coincides with falling sales
For the most recent third quarter results, announced in August, group sales, which include its household goods portfolio and famous battery brand, were down 8.9 percent to $1.23bn on a reported basis, which included a hit of $28.7m, or 2.3 percent due to unfavorable currency exchange rates from revenues earned in Europe and Latin America.
Net earnings for the group were $70.2m, compared to $65.9m in the corresponding quarter for 2011. Although the company has continued to improve its profit margin on the back of restructuring, the increase was still below market analysts’ expectations.
Energizer started expanded into the personal care arena in 2003 with the purchase of shaving brands Schlick and Wilkonson Sword from Pfizer, with the addition of Playtex Products in 2007, which included the Hawaiin Tropics sunscreen brand.
