Consumer Products operating income increased to $95 million in the third quarter from $79 million in the same period of Fiscal 2011, representing a year on year increase of 21% driven primarily by higher sales and efficiency gains. Consumer Products delivered record adjusted EBITDA of $133 million, up 4% year-on-year (or 12% excluding the negative impact of foreign exchange).
The small appliances, pet supplies, home and garden control products, electric shaving and grooming products, and electric personal care products all reported higher revenues in the third quarter compared to the previous year, and sales growth excluding the negative impact of foreign exchange was 6%. Growth was strongest in pet supplies and home and garden product lines, which reported year-on-year sales increases of 9% and 7% respectively, helped by gains due to the FURminator and Black Flag acquisitions and growth in higher margin products. Battery sales decreased 4% due to negative foreign exchange impacts and weaker North America sales tempered by increases in Latin America and Europe.
Consumer Products gross profit for the third quarter was $292 million versus $294 million in the comparable period last year while gross profit margins decreased to 35% from 37% a year ago, primarily as a result of commodity prices and increased costs from sourced goods. Lower gross margin was more than offset by the $18 million reduction in SG&A expense at Spectrum Brands, attributable to cost synergies, a decline in integration charges from the acquisition of Russell Hobbs and positive foreign exchange impacts, which contributed to the strong increase in Consumer Products operating income and record adjusted EBITDA. Adjusted EBITDA is a non-U.S. GAAP measure that excludes interest, income tax expense, restructuring and related charges, acquisition and integration related charges and depreciation and amortization expenses - see “Non-U.S. GAAP Measures” and Table 3 for a reconciliation of adjusted EBITDA to the Consumer Product segment’s operating income.
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