updated 2/3/2005 1:31:49 PM ET 2005-02-03T18:31:49

Gillette Co. said Thursday that solid sales of its shaving, dental care and battery products lifted fourth-quarter profits by 13 percent, slightly below Wall Street expectations, as the consumer goods company prepares to be acquired by Procter & Gamble Co.

Gillette reported net income for the October-December period of $415 million, or 41 cents per share, compared with $368 million, or 36 cents per share, in the same quarter a year earlier. Net sales rose to $3.11 billion, up 19 percent from $2.62 billion in the year-ago period, with favorable foreign exchange rates accounting for 4 percentage points of the increase.

The prior year's fourth quarter included a $10 million gain from discontinued operations, while Gillette reported no one-time expenses or gains in the latest quarter.

The latest profit came in a penny per share below the consensus forecast of analysts surveyed by Thomson First Call.

Gillette reported sales gains across its portfolio of consumer products, including the recently introduced M3Power and Venus Divine shavers, Oral-B dental care products, Braun electric shavers and Duracell batteries. Sales of blades and razors rose 16 percent in the fourth quarter — a result hurt by advance third quarter shipments of razors to be sold during the holidays. Sales of dental care products and Braun shavers both rose 28 percent in the quarter, with battery sales up 12 percent.

Gillette's full-year net income was $1.69 billion, or $1.68 per share, up 22 percent from the company's 2003 profit of $1.39 billion, or $1.35 per share. Sales rose 13 percent to $10.48 billion from $9.25 billion in 2003.

"We made significant progress last year in all our areas of business," said James M. Kilts, Gillette's chairman, president and chief executive.

Gillette did not offer an earnings forecast, but Kilts said, "We look forward to another very good year in 2005."

The earnings report was being closely watched as it came less than a week after Cincinnati-based P&G announced plans to buy Boston-based Gillette in a $57 billion deal that would create the world's largest stable of consumer products.

The deal, P&G's biggest acquisition in its 167-year history, requires shareholder and regulatory approval. It would create a behemoth with more than $60 billion in revenues that would eclipse Unilever, the maker of Dove soap and Lipton tea.

Massachusetts Secretary of State William F. Galvin this week asked Gillette for information about future job cuts and plans to reward executives financially as part of the sale. Galvin said Wednesday he believes a review is merited because of the deal's size and the large payouts executives at Gillette are due to receive. Kilts stands to benefit from gains on his Gillette stock, a one-time "change of control" payment of $12.6 million and nearly $24 million in options and restricted stock at P&G.

Initial estimates of the gain Kilts stood to make were $153 million, but The Wall Street Journal reported Thursday that its new estimate is at least $185 million, accounting for details in his complicated compensation package including a supplemental pension payment. The Journal said it arrived at its new estimate with the assistance from an executive pay expert.

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