Appliance maker Maytag (Newton, IA, U.S.) reported second quarter consolidated sales of U.S. $1.15 billion, down 1 percent from $1.16 billion in the same period of 2003. Reported net loss for the second quarter of 2004 was $41.1 million, or $0.52 cents per share, as compared with net income of $25.2 million, or $0.32 cents per share in 2003.
According to the company, lower Hoover floor care sales as well as higher material costs and lower burden absorption negatively affected reported results compared with 2003. Also impacting second quarter results were contingent liabilities recorded for pending litigation, restructuring charges, and a goodwill impairment charge.
Maytag Appliances' sales increased 2.4 percent in the second quarter to $906,165 from $885,138 in 2003. Net sales for the first 6-month period increased 8 percent to $1.9 million from $1.7 million in 2003. "In the second quarter we gave back our first quarter branded market share gains, and some OEM share. We expect sales to improve in the last half of the year as we introduce new products, which customers are anticipating," Ralph Hake, chairman and CEO said. Sales decreased in the Commercial Products segment, primarily due to a decline in the vending industry.
Mr. Hake noted that the new contract ratified by union employees of Maytag's Newton Laundry Products operations, which followed a 3-week work stoppage, provides an improved cost structure and a continuation of supply. The financial impact of the work stoppage to the second quarter exceeded $5 million in direct costs. A contract with union employees at Maytag's Amana, IA, Refrigeration Products plant will expire in September. Maytag's Galesburg, IL, Refrigeration Products plant is scheduled to cease production in September, and the company's new Reynosa, Mexico, refrigeration plant is operational.
The company also said Hoover continues to be challenged by loss of market share. "Our strategy is to introduce innovative products and reduce cost structure. Hoover has launched nine of the 15 new products expected this year. We should be better positioned at the high end of the floor care pricing spectrum with new products scheduled for early 2005," Mr. Hake said.
Maytag's sales in the first 6 months of 2004 amounted to $2.37 billion, up 3.1 percent from sales of $2.30 billion in the first 6 months of 2003. Reported net loss for the first 6 months of 2004 was $2.4 million, or $0.03 cents per share. In the first 6 months of 2003, Maytag's reported net income was $59.7 million, or $0.76 cents per share.
As a result, the company now expects full-year reported earnings per share in the range of $0.20 to $0.30 cents. The 2004 full-year guidance includes restructuring charges of approximately $0.80 cents per share.
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