Maytag Corp.'s chief executive said that the appliance maker's Hoover vacuum unit faced a "very challenging business" climate, with third-quarter results expected to look similar to the second quarter, when profits dropped 63 percent on slumping sales.
"We expect the third quarter to look a lot like the second quarter from an earnings standpoint," Maytag's Ralph Hake told analysts during a presentation to discuss a new Maytag drying product that was carried on the Internet.
Analysts currently expect Maytag to post profit of U.S. $0.57 per share when it releases third-quarter earnings next month, compared with a profit of $0.71 in the same quarter a year earlier, according to Reuters Research.
Mr. Hake said Hoover's problems include high fixed costs, too much manufacturing capacity, rising retiree medical and pension costs, and competition from cheaper vacuums. He added Maytag was consolidating factories and looking hard at ways to reduce costs to make Hoover a much smaller business.
"It's a very challenging business out there both from volume and mix, at least from the Hoover perspective," he said.
Maytag, based in Newton, IA, U.S., is also bringing cheaper floor-care products to market and looking to diversify Hoover beyond upright vacuums. Mr. Hake said he believes there's a home-care service opportunity that Maytag can exploit using its Hoover products. (Reuters)
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