Feb 12 Energizer Holdings Inc said on Tuesday that the devaluation of the Venezuelan bolivar will be a drag on results in its current fiscal second quarter, as the battery and razor maker must change the way it accounts for its business there.
Energizer estimated a charge of $7 million to $8 million from changing value of the net monetary assets of its Venezuela affiliates to comply with the new rate. The charge will affect reported net earnings per share, but Energizer said it plans to exclude the charge when it computes adjusted earnings per share.
Analysts had anticipated that the impact to Energizer would be less severe than at companies such as Colgate-Palmolive Co , as price controls were not imposed on batteries, one of Energizer's key products. Colgate said on Monday it would take a charge of $120 million in the first quarter to re-measure its balance sheet at the new rate.
Energizer's Venezuela affiliates had about $42 million of net monetary assets as of Dec. 31, 2012. Those assets will be valued using the new 6.30 per U.S. dollar rate once it is effective, rather than at the so-called SITME rate that had been administered by the central bank, which had been about 5.4 bolivar fuerte per U.S. dollar.
Venezuela devalued its currency by 32 percent on Friday in a widely expected move. It was the country's fifth devaluation in a decade.
Energizer also expects to translate Venezuela operating results for the final eight months of fiscal 2013 at a higher rate than before. The negative impact on the U.S. dollar value of Venezuela operating results is expected to be a drag on both reported and adjusted earnings per share in the second quarter and in the future, assuming an official exchange rate of 6.30 bolivar fuerte per U.S. dollar. Still, the estimated impact of translating the Venezuela affiliates' operating results should not be material, Energizer said.