Appliance maker Maytag Corporation reported first-quarter consolidated sales of U.S. $1.2 billion, down 4.2 percent from sales of $1.2 billion in the same period last year. Consolidated net income for the first quarter was $7.7 million, or $0.10 per share, compared with net income of $38.7 million, or $0.49 per share, in 2003.
Maytag said savings from restructuring activities implemented in 2004 only partially offset rising costs. Lower net sales and higher costs -- primarily for steel and energy-related items, and higher distribution costs -- reduced first-quarter, year-over-year profitability.
Maytag Chairman and CEO Ralph Hake stated that while the company achieved the gains that were anticipated through the "One Company" restructuring, it is clear that not enough progress has been made.
"We must immediately take more aggressive steps to improve our cost position by reducing our manufacturing footprint," he said. "This will require a manufacturing restructuring that addresses our noncompetitive supply chain costs and burden absorption issues. A new financing plan will fund these business initiatives, which will include a new credit agreement and finalizing plans to refinance 2006 debt maturities."
In Maytag's Home Appliance segment, the company reported that sales declined compared to 2003 as a result of lower sales of OEM refrigeration products, lower sales at Best Buy, and lower average selling prices for floor care products.
However, Mr. Hake noted that the company experienced sequential market share improvement in all major appliance categories, signaling that the actions Maytag has implemented to improve its sales performance are taking root.
"We expect further growth from new products scheduled for launch in the first half 2005, among them are the Maytag(R) Neptune(R) 27-in washer and dryer, the Jenn-Air(R) suite of glass-front appliances, and the new Hoover(R) FloorMate(TM) hard floor cleaner," Mr. Hake said.
In addition, he noted that the Jenn-Air(R) premium appliance lines and the company's value brands posted strong gains in the quarter. Maytag said it saw an improvement in average selling prices in the first quarter of 2005 based upon its recent pricing actions; however, these increases were largely offset by selected 2004 price repositioning and product mix.
As expected, floor care sales were down year-over-year due to pricing actions in 2004. However, floor care did see stabilization in market share in key categories with positive momentum attributed to the full-size extractor category.
"We expect new floor care product launches to take hold with new premium products slated for the second half of the year," Mr. Hake said. "Going forward, our most innovative products this year focus on floor care and laundry, which we believe are significant opportunities."
Maytag Services and Maytag International reported double-digit revenue growth this quarter versus the same period in 2004. Commercial Products remained down year-over-year given the ongoing weakness in the vending industry.
Mr. Hake said that the lower-than-expected realization from Maytag's pricing actions, as well as higher fuel and energy-related raw material costs, have prompted the company to reduce guidance for 2005.
Maytag now expects reported earnings per share for the full-year 2005 in the range of $0.45 to $0.55, including approximately $0.10 in restructuring charges. Earlier, the company noted that 2005 guidance for reported earnings per share were expected to be in the range of $1.10 to $1.30, including about $0.05 for restructuring charges.
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