Maytag earnings up in Q1

Maytag earnings up in Q1
Date April 22, 2004
Section(s) Local News

(AP) — Maytag Corp. cited strong sales in its major appliances, which helped offset a decrease in floor care products, for a $4.2 million increase, or 12.3 percent, in its first quarter. Shares fell, however, as much as $1.99 in early trading on news of Hoover’s poor showing.

Maytag, the nation’s third largest home appliance retailer, reported first quarter earnings of $38.7 million, or 49 cents per share, up from $34.5 million, or 44 cents per share, in the first quarter of 2003.

Sales for the quarter were $1.2 billion, up from $1.1 billion from a year ago.

“Our results reflect steady progress on many fronts. The company’s multiple product launch strategy is being well-executed, with new models entering the marketplace on schedule,” said Ralph Hake, chairman and chief executive officer. “This successful implementation resulted in strong overall sales growth and market share improvement in Major Appliances. Results in our Major Appliances segment offset declines in the Housewares segment attributable to a reduction in sales of Hoover floor care products.

Hake said several new high-end products, including Maytag’s Neptune top-loading washer and Maytag and Amana ranges and dishwashers, contributed to the company’s strong overall sales.

Maytag’s major appliance segment, which includes Maytag Appliances, Maytag Services and Maytag International, had first quarter sales of $947.3 million, up 14 percent from $830.9 million a year ago.

While floor care industry sales increased in the first quarter, most of the growth was at low price points, where Hoover is underrepresented, Hake said. Hoover, he said, continues its recovery strategy of becoming cost competitive and launching as many as 15 new products.

Maytag’s housewares segment, which includes Hoover Floor Care and Maytag Housewares, had first quarter sales of $178.8 million, a 16.4 percent drop from $214 million from the first quarter of 2003.

“Hoover has been restructured for cost improvement and greater flexibility, and the organization has made strong progress in designing and launching new products. However, after a solid fourth quarter, Hoover struggled with market share and revenue generation in the first quarter.”

In the first quarter of 2004 versus the prior year, Maytag experienced higher advertising expenses to support product introductions.

Hake said that rising costs of steel, resins and fuel were challenges in the first quarter, and will continue to demand aggressive management.

“Competitive challenges will continue in the major appliance and floor care industries, coupled with rising steel, resin and fuel costs,” he said. “We plan to offset these pressures with continuing successful execution of planned product launches, aggressive cost reduction efforts and efficiencies gained through LeanSimga implementation.”

In a conference call with investors, Hake noted the importance of two labor contracts to be negotiated this year. The labor contract in Newton expires June 1 while the contract at Amana expires Sept. 25.

Hake told investors that inventory in Newton has been built out for a 30 to 45 day period as “a hedge against a possible strike.”

In the first quarter, the company made $70 million of the $90 million voluntary pension contributions planned for the full year. The company expects to make at least an additional $20 million in pension contributions later in the year.

Total pension and postretirement expense is $2.5 million lower in the first quarter of 2004 versus the prior year as a result of expected returns from higher pension contributions, reduced retiree medical benefits accruals related to a new collective bargaining agreement at Hoover in North Canton, Ohio, and the election to record the benefits of Medicare legislation that will provide federal reimbursements for a portion of the company’s retiree prescription drug costs. The effect of the subsidy for 2004 is expected to be $8.6 million, which will be recognized evenly throughout the fiscal year. As a result of the election to record the Medicare legislation benefits, Maytag has reduced its accumulated benefit obligation for retiree medical costs by $52.8 million.

Also reflected in first quarter reported earnings is a reduction of tax expense of 3 cents per share. This is the result of the corporation filing amended returns for prior years following a comprehensive review conducted across the company.

First-quarter commercial sales, which includes Dixie-Narco Vending, Maytag Specialty and Maytag Commercial Laundry, were $92.9 million, up 1.9 percent from 91.2 million a year ago.

Hake reaffirmed that for the full year 2004, excluding restructuring charges of approximately 40 cents per share related primarily to the planned closing of the Galesburg, Ill., plant, the corporation expects earnings of $2.30 to $2.40 per share.

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2 Responses to “Maytag earnings up in Q1”

  1. shelly Says:

    great appliances are neat!

  2. banshee Says:

    good post – filled my coffee break

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