Maytag reports lower third quarter earnings

Maytag reports lower third quarter earnings
Date October 21, 2004
Section(s) Local News
By the Associated Press

and Daily News Staff

Maytag Corp. reported today that third quarter earnings fell nearly 80 percent from a year ago as restructuring costs, higher steel prices and lower sales in Hoover floor care products took a toll.

The nation’s third largest appliance manufacturer reported profits of $7.5 million, or 9 cents a share, from $36.6 million, or 46 cents a share, last year.

Sales dropped 3 percent to $1.19 billion from $1.22 billion from the same quarter in 2003.

Excluding restructuring and other charges, the company earned 15 cents a share, missing the 18 cents per share consensus estimate of analysts surveyed by Thomson First Call.

The Newton-based company reported a charge of 16 cents a share including $11.9 million for closing a refrigerator plant in Galesburg, Ill., and $7.2 million for a company-wide restructuring plan.

Maytag cut 20 percent of its salaried work force, or 1,100 jobs, as it consolidated its Hoover, Maytag Appliances and headquarters divisions into what it said was a “one-company” approach, designed to improve speed and competitiveness.

“The ‘One Company’ restructuring is on track, and I think it’s going to pay enormous dividends,” CEO Ralph Hake said during a conference call this morning.

The company expected to save about $30 million a year from closing the Galesburg refrigerator plant, beginning in the fourth quarter, Hake said Thursday in a statement.

“We are taking the right actions to improve Maytag‘s performance going forward,” he said. “Our ‘One Company’ restructuring, which consolidates Hoover floor care, Maytag Appliances and corporate organizations, is on track for $150 million in annual savings and lowered our costs in the third quarter.”

During the conference call, Hake noted that Maytag‘s Neptune laundry products gained additional market share in the third quarter. The front load Neptune washer and dryer are manufactured at Maytag‘s Newton facility.

“Our Neptune family of products… did very well, we’re very pleased with how that family is doing,” Hake said.

One caller asked how Maytag was dealing with increased competition from Asian appliance imports.

“The Asians are here. They’re here to stay. They will have an impact. They have to build their distribution a step at a time and right now that’s the process they’re in,” he said. “Our view is that they’re a real threat and we have to get prepared for them.”

Hake vowed the company would deal with this competition by developing more innovative “high end” products.

Maytag stock rose 14 cents to $15.95 in early trading Wednesday on the New York Stock Exchange. They traded above $32 a share as recently as last April.

Hake said the company’s new labor agreements at the Maytag-owned Amana refrigeration plant and sale of a joint venture in China will also help the company going forward.


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