Maytag Corporation reported third quarter consolidated sales of U.S. $1.19 billion, down 3 percent from sales of $1.22 billion in the same period last year. Net income for the third quarter of 2004 was $7.5 million, or $0.09 cents per share, compared with $36.6 million, or $0.46 cents per share a year ago.
While year-over-year comparisons are unfavorable, the company said that progress has been made with sequential improvements from the second quarter to the third quarter of this year. Consolidated sales are up 3 percent from $1.15 billion in the second quarter.
Third quarter net income of $7.5 million, or $0.09 cents per share, was an improvement over the second quarter's net loss of $41.1 million, or $0.52 cents per share. Included in the third quarter are restructuring and related charges of $0.16 cents per share for the Galesburg closure and "One Company" reorganization, as well as a gain of $0.10 cents per share from the sale of a Canadian warehouse.
Maytag said the improvements in the third quarter resulted primarily from higher sales in major appliances and savings from cost-reduction efforts. The improvement was achieved despite significantly higher steel and energy-related costs. The company said unfavorable year-over-year comparisons were caused primarily by lower Hoover floor care sales volumes and pricing, as well as higher steel costs.
Maytag chairman and CEO Ralph Hake said, "We accomplished a great deal in the third quarter with the sequential improvement in sales and operating income. We are taking the right actions to improve Maytag's performance going forward. 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. Also in the third quarter, we made significant progress in cash flow and lowered inventories from the previous quarter, reached a new labor agreement at our Amana plant, and completed the sale of our joint venture in China."
Operating results for the third quarter were impacted by a charge of $7.2 million recorded in connection with the "One Company" restructuring. Restructuring charges of $11.9 million were recorded in connection with closing the Galesburg plant. Annual savings of $30 million from the closing of the plant are anticipated to start in the fourth quarter of 2004.
Mr. Hake said that the company expects reported earnings per share in the range of $0.05 to $0.10 cents. This includes restructuring and related charges of approximately $0.10 cents per share.
Effective with the third quarter of 2004, Maytag changed its segment reporting from three segments to two, as the company aligned its segment reporting to reflect its major restructuring effort to consolidate Hoover floor care, Maytag Appliances, and Corporate Headquarters organizations. The new reporting segments are Home Appliances, which includes major appliances and floor care products as well as the company's international export business and service operations, and Commercial Products, which includes vending equipment and commercial cooking products. Net sales and operating income have been reclassified for the new segments for 2003 and 2004 by quarter and for the full year 2002.
For the 9-month period of 2004, Maytag's sales increased 1.1 percent to $3.56 billion compared with $3.52 billion in 2003. Net income for the 9-month period was $5.1 million, or $0.06 cents per share, compared with $96.3 million, or $1.22 per share for the same period in 2003.
Maytag's Home Appliances segment reported 9-month sales of $3.35 billion, up slightly from sales of $3.28 billion in 2003. The Commercial Products segment reported 9-month sales of $211.0 million. In the first 9 months of 2003, the segment had sales of $236.4 million and operating income of $19.4 million.
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