P&G to exit Duracell battery business; quarterly sales dip

(Reuters) - Procter & Gamble Co on Friday said it would sell its Duracell battery business, probably through a split-off into a separate company, as it looks to focus on faster-growing brands.

P&G shares rose 3 percent as investors shrugged off a marginal fall in quarterly sales and warning that a stronger dollar would significantly hurt revenue and earnings this quarter.

The world's No. 1 household products maker said in August it could sell about half of its slow-growing brands in the next two years. Duracell, the world's No. 1 battery business, was widely considered to be one of the largest assets that P&G was likely to divest.

On a conference call, Chief Financial Officer John Moeller said the company had sold or discontinued 11 brands in the latest quarter and 25 in the last five quarters. Analysts expect it to sell laundry brands Fab and Trojan, Perma Sharp shaving blades and Fekkai hair products, among others.

P&G does not break out results from Duracell, but analysts said it had earned about $500 million before interest, taxes, depreciation and amortization last year on $2 billion in revenue.

However, demand for Duracell's mainstay non-rechargeable, disposable alkaline batteries has waned while a worldwide explosion in electronic devices has increased demand for re-chargeable batteries.

P&G, whose brands include Pampers diapers and Tide detergent, said it would first sell its interest in a China-based battery joint venture for an undisclosed amount and then exit Duracell completely.

The company said it was looking to split Duracell off into a stand-alone company but would consider alternatives that offer better value to shareholders.

Under the split-off, expected in the second half of 2015, P&G shareholders would be able to exchange some, none or all of their stock for shares of Duracell.

SALES STRUGGLE

P&G said it expected the percentage growth in its net sales in fiscal 2015 to be little changed or rise in the low single digits, including a 2 percentage point negative impact from a strong dollar.

The company had earlier said it expected low single-digit percentage growth, including a 1 percentage point hit from foreign exchange.

Net income attributable to P&G fell to $1.99 billion, or 69 cents per share, in the first quarter ended Sept. 30 from $3.03 billion, or $1.04 per share, a year earlier.

Core earnings, excluding the currency impact, were $1.07 per share, in line with the analysts' average estimate, according to Thomson Reuters I/B/E/S.

Net sales dipped to $20.79 billion from $20.83 billion due to currency fluctuations and divestitures. Organic sales, excluding those effects, increased 2 percent.

Shares of P&G were up 2.5 percent at $85.34 at midday.

(Reporting by Sruthi Ramakrishnan in Bangalore and Nandita Bose in Chicago; Editing by Kirti Pandey, Jilian Mincer and Lisa Von Ahn)

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