Energizer Announces Preliminary Results Of Comprehensive Review Of Cost Structure And Operating Model Estimated Gross Annualized Cost Savings of $175 to $200 Million
Energizer Holdings (NYSE: ENR) today announced that its management team, working closely with independent advisors, has completed its initial assessment of the Company's cost structure and operating model undertaken to improve its cost competitiveness and deliver enhanced financial returns.
Upon completion, Energizer expects to achieve gross annualized pre-tax cost savings of $175 to $200 million. The Company expects that 70-80% of the savings will improve profitability, and the remaining portion of the savings will be reinvested to drive long-term growth. Based on its initial analysis, the Company estimates one-time charges associated with achieving these benefits to be less than 1.25 times gross annualized savings.
Energizer anticipates that modest benefits from these initiatives will begin accruing in the second half of Fiscal 2013 and that a substantial portion of the actions necessary to achieve the total savings will be completed by the end of Fiscal 2014. Upon the approval of a final plan by the Board of Directors, the Company will provide details into the timing of the savings and related costs in its fiscal year-end earnings release and conference call on November 9, 2012.
These savings are expected to be achieved by simplifying processes and substantially reducing organizational complexity and costs, including:
Manufacturing facility rationalization, including support infrastructure, in the Household Products division; Reduction of the global workforce; Changes in Energizer's go-to-market strategies, including a streamlined international organization; Reduction in overhead spending; and Procurement savings. The Company expects these savings to generate increased cash flow and improve key operating metrics, including gross margin and overheads as a percent of sales. In addition, the savings will enable increased investment in brand building and innovation to drive future growth.
"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, Chief Executive Officer. "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."
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