Gillette Co. posted higher first-quarter profit Thursday, boosted by sales of new razors, cost cuts and the weak dollar.
Over the past several years, the world’s largest maker of blades and batteries has cut costs, eliminated some factories and improved its new-product pipeline, turning around a company that had been a laggard in the consumer products industry.
“Topline was much stronger than I would have expected, even excluding the currency benefit,” said William Chappell, consumer products analyst at SunTrust Robinson Humphrey. “Bottomline, they always said the benefit (of cost cutting) would start outweighing costs in 2004, and boy, did it.”
Shares of Boston-based Gillette rose about 2 percent in trading before the market opened Thursday.
Gillette posted profit of $376 million, or 37 cents a share, compared with $263 million, or 25 cents a share, a year earlier. Analysts on average forecast earnings of 29 cents a share, according to Reuters Research, a unit of Reuters Group Plc.
Sales rose 13 percent to $2.24 billion. Analysts on average had forecast sales of $2.10 billion, according to Reuters Research. The weak dollar, which boosts the value of sales in other currencies, added 7 percentage points to the sales gain, Gillette said.
The improved operations come even as Gillette faced a rejuvenated competitor in the blade and razor business, Schick-Wilkinson Sword, which was bought by Energizer Holdings Inc.last year.
Razor and blade sales rose 16 percent to $1.04 billion, helped by sales of the Venus Divine women’s razor and Sensor3 disposable. Half the sales increase came from the weak dollar.
Duracell battery sales rose 8 percent to $414 million, mostly due to foreign exchange. An acquisition in China and lower spending on incentives for retailers to sell and consumers to buy the batteries also helped sales.
“While Duracell maintained dollar share for the quarter, the dynamics of the category are still unstable,” James Kilts, Gillette’s chairman and chief executive, said in a news release. The U.S. battery business is recovering from a period where aggressive promotional spending cut into sales.
Sales of Oral-B toothbrushes and other oral-care products rose 7 percent to $315 million, due to the benefits of the weak dollar, Gillette said.
Kilts said sales of its new M3Power razor and several oral-care products should push sales in the second quarter, with growth moderating in the second half of the year as sales to retailers drop below sales to consumers.
