Appliance maker Maytag Corp. (MYG) on Thursday reported a strong rise in quarterly profit but its shares fell 6 percent on weakness at the Hoover vacuum unit.
Raymond James & Associates downgraded Maytag to “market perform” from “strong buy.” It said quarterly operating results missed its estimate as major appliance margins were flat despite a 14 percent rise in sales.
Maytag said its housewares segment, which includes Hoover, suffered lower sales and operating income. Weakness at Hoover has hurt the company’s earnings over the past year as consumers have migrate to lower-priced vacuums.
The Newton, Iowa, maker of Jenn-Air and Amana appliances posted first-quarter net income of $38.7 million, or 49 cents a diluted share, up from $34.5 million, or 44 cents a share, a year earlier. The 2004 results included a benefit of 3 cents a share related to retiree prescription drug costs.
Excluding restructuring charges, Maytag said earnings were 56 cents a share, up from 52 cents a year earlier. Analysts on average were expecting 54 cents, according to Reuters Research, a unit of Reuters Group Plc.
Sales rose 7 percent to $1.22 billion.
In the major-appliances segment, which includes services, sales rose 14 percent and operating profit jumped 16 percent, excluding special charges, Maytag said.
But in the housewares segment, sales dropped 16 percent and operating income fell 36 percent.
Morgan Keegan analyst Laura Champine said some on Wall Street had expected a rebound at Hoover.
Commercial products sales, which includes Dixie-Narco Vending, were up 2 percent but operating profit declined 26 percent.
Maytag said new products such as its Neptune top-loading washer and its Drying Center, which combines a tumble dryer on the bottom with an upper cabinet where clothes can hang to dry, helped boost its market share in major appliances.
Champine said Maytag benefits from selling at home improvement retailer Home Depot Inc. (HD), which does not sell appliances of Maytag rival Whirlpool Corp. (WHR).
“Since Home Depot had a healthier quarter than Sears (S) in the appliance business, Maytag’s growth in the major appliance segment was stronger than Whirlpool’s,” she said.
Whirlpool on Wednesday posted an 11 percent rise in quarterly profit on strong demand for higher-end appliances.
Maytag said advertising expenses rose in the first quarter. It also said it plans to offset rising costs of steel and other raw materials with cost cuts and new products.
It forecast full-year earnings of $2.30 to $2.40 a share, excluding restructuring charges of 40 cents a share related to a plant closing. Analysts’ average forecast is $2.32, according to Reuters Research.
Maytag shares were down $1.37 to $29.25 on the New York Stock Exchange, while Whirlpool’s stock eased 24 cents to $66.51.
From MSN