Energizer Holdings Inc's (ENR.N) quarterly profit did not fall as much as expected, as strong razor sales helped mitigate the impact of higher costs for materials such as zinc and weak demand for batteries.
The maker of Energizer and Eveready batteries, Schick razors and Playtex tampons topped Wall Street's profit forecast even though it spent more on advertising than some analysts had expected. Its shares, which the company is buying back, rose as much as 4.4 percent.
Energizer said it had repurchased 2.2 million shares so far this fiscal year, including 1.2 million in July alone.
"Buybacks have been a critical driver of the stock ... and they haven't been really that aggressive for about four years," said UBS analyst Nik Modi, who upgraded the shares to "buy" in early July.
Energizer said on Wednesday that earnings fell to $65.9 million, or 94 cents per share, in the third quarter ended on June 30 from $104 million, or $1.47 per share, a year earlier.
Excluding items such as restructuring costs, the per-share profit rose to $1.37 from $1.35 and surpassed Wall Street's average forecast of $1.25, according to Thomson Reuters I/B/E/S.
Energizer, which raised prices to help offset higher costs, said sales jumped 14.6 percent to $1.23 billion, buoyed by November's American Safety razor acquisition and favorable currency fluctuations.
The company has suffered from the increasing use of devices with built-in rechargeable battery systems, as well as volatile commodity markets and competition from companies such as larger rival Procter & Gamble Co (PG.N).
Besides their dueling battery businesses, Energizer and Duracell maker P&G also compete in razors and tampons.
At Tuesday's close, shares of Energizer were up 6.9 percent so far this year, while P&G had fallen 1.9 percent.
On Wednesday morning, Energizer shares were up 3.2 percent at $80.40 after rising as high as $81.32. P&G fell 0.4 percent to $62.84.
RAZORS OFFSET BATTERY SLUMP
Energizer's sales of personal care items such as razors and sunscreen rose 23.1 percent to $725.3 million, helped by the American Safety deal. Organic sales, which strip out currency fluctuations, acquisitions and divestitures, rose 4.9 percent.
Sales of household products, including batteries, rose 4.4 percent to $509.2 million, and organic sales fell 0.2 percent.
Operational profitability rose about 14 percent in personal care and fell about 24 percent in household products.
The company spent $156.2 million, or 12.7 percent of net sales, on advertising and promotions, compared with $145.2 million, or 13.5 percent, a year earlier.
Energizer still expects 2011 earnings, excluding one-time items, of $5.10 to $5.30 a share, matching the bleak forecast it gave back in February. Analysts are now looking for a profit of $5.28.
However, the company said it now expects net earnings of $3.90 to $4.10 per share, down from its April forecast of $4.00 to $4.20, due to payments associated with debt refinancing.