Gillette Reports Sales Gains in Fourth Quarter

The Gillette Company reported strong gains in the fourth quarter in both net sales and net income as its blade and razor business reached a record high global market share for the second consecutive year and its oral care business scored strong sales and market share gains in both manual and power toothbrushes.

For the year, net sales increased to $8.45 billion, up 5% from $8.08 billion in 2001. Executives said increased volume accounted for the sales gain. Net income from continuing operations for the year rose to $1.21 billion, 33% higher than the prior year. Profit from operations for the year 2002 climbed to $1.81 billion, 21% above the previous year.

For the quarter, net sales rose 5% to $2.53 billion from $2.42 billion in the fourth quarter of 2001. A volume increase of 2% was complemented by a 3% positive impact of foreign exchange. Net income from continuing operations increased 69% to $339 million. Profit from operations for the quarter was $510 million, up 54% from the prior year.

“We finished last year with good momentum that is carrying into 2003,” said James M. Kilts, chairman and chief executive officer. “We made good progress last year on all three aspects of our turnaround-financial, strategic and improving costs and capabilities. Our financial accomplishments are evident in gains that we made in all key metrics, including working capital, capital expenditures, free cash flow and return on assets.”

He noted that Gillette’s strategic gains came in each of its core categories. “In Blades and Razors, we reached a global value market share of 72%, our highest ever, as strong growth continued for our Mach3 and Venus franchises. While the imminent sale of the Schick business will present new challenges this year, we intend to pursue our previously stated objectives. We will continue to stabilize our market share in disposables and drive the growth of the overall systems segment.”

The company invested heavily in 2002 in both advertising, which climbed more than 12% compared with 2001, and in expenses associated with reducing costs and improving capabilities, which totaled $121 million in 2002. While these investments restrained operating margins, the company said that they are strengthening Gillette’s brands and its organization.

Blade and Razor sales jumped 5% to $894 million in the fourth quarter. The Mach3 and Venus brands accounted for 32% of the global market and 40% of the U.S. market. Oral care sales for the quarter increased 11% to $387 million, and profit decreased 23% to $59 million. The strong sales growth reflected gains by the Oral-B battery toothbrush and Oral-B Stages children’s toothbrushes in North America and Europe and entry-level manual toothbrushes in developing markets, according to executives. Personal care sales increased 3% to $221 million for the quarter due to sales gains by PowerStripe antiperspirants and deodorants in North America, and male and female shave preparations in Europe.