Shares of Maytag Corp. rose more than 7 percent on Monday after the appliance maker backed its previous forecast for 2005 profit, which is currently above average Wall Street expectations.
The maker of Jenn-Air and Amana appliances said it was on track to achieve $150 million in annual savings from a companywide restructuring. It also said it had upgraded its computer systems and was evaluating longstanding expenses such as retiree medical costs.
Maytag has cut salaried staff but faces hurdles, including reviving its Hoover vacuum unit and fending off competition from foreign rivals, such as LG Electronics (066570.KS: Quote, Profile, Research) of South Korea, which have picked up display space at U.S. retailers.
Both Maytag and Whirlpool Corp. (WHR.N: Quote, Profile, Research) told a Raymond James investor conference on Monday that price increases were being passed through. Major appliance companies raised prices by at least 5 percent this year to help offset higher costs of steel, oil and other raw materials.
“We are finding that we have pricing power,” Whirlpool CEO Jeff Fettig said.
Shares of Whirlpool gained 2.3 percent. David MacGregor, an analyst with Longbow Research, raised his estimates for first quarter and full-year profit for Whirlpool, citing U.S. price increases.
Maytag and Whirlpool also backed their previous views for 2005 profit. Maytag expects earnings in the range of $1.10 to $1.30 a share, including about 5 cents of restructuring charges. Whirlpool sees profit of $5.90 to $6.10 a share.
Analysts currently expect 2005 per-share profit of $1.09 for Maytag and $5.78 for Whirlpool, according to Reuters Estimates.
Maytag, based in Newton, Iowa, said lost business at retailer Best Buy Co. (BBY.N: Quote, Profile, Research) , which earlier this year dropped Maytag appliances but still sells Hoover vacuums, was largely due to the fact that rivals offered better profit margins. Chairman Ralph Hake also said Maytag expects to grow its business with Home Depot Inc., which accounted for 10 percent of Maytag’s sales last year, despite the entry of LG at that retailer.
Maytag shares, which are down about 48 percent from a year ago, were up $1.12 to $15.82 in afternoon trading, while Whirlpool’s stock gained $1.53 to $67.32.
From Reuters