Maytag Corp. earnings rose in the fourth quarter, closing out a difficult year in which problems at its Hoover floor-care unit weighed down the company.
Maytag reported fourth-quarter earnings of $23.9 million, or 30 cents per share, up from $3.3 million or four cents per share a year earlier.
Earnings would have been 55 cents per share excluding restructuring charges related to the closing of Maytag’s Galesburg, Ill., refrigerator plant, and other one-time charges. Maytag earned 62 cents per share in last year’s fourth quarter before one-time charges.
“We achieved strong revenue growth in the fourth quarter, and earnings were consistent with our expectations,” Chairman and CEO Ralph Hake said. He spoke at Maytag’s Herrin, Ill., laundry products plant, where the company just launched a new line of energy-efficient dryers.
Consolidated sales were up 12.8 percent, due mainly to success in major appliance sales.
Maytag introduced new laundry and cooking products. International sales were up 23 percent due partly to favorable currency exchange rates.
For all of 2003, Maytag reported earnings per share of $1.53, down from $2.40 in 2002, and operating income was down 36.5 percent to $228.2 million.
Hake said pricing pressures hurt the Hoover floor products unit, contributing to erosion of Maytag’s operating margins for the year. Maytag also incurred a fourth-quarter loss in its Jade kitchen products business, due primarily to operational difficulties caused by a relocation of its California plant.
For the current fiscal year, Maytag is forecasting earnings of $1.90 per share. Hake said Maytag plans an aggressive schedule of product rollouts, including innovative new Hoover products needed to rise above the price wars at the low end of the floor care market.
A new line of wide-by-side refrigerators made at the company’s plant in Amana was launched this month. The line will replace wide-by-side models formerly produced in Galesburg.
Hake said Maytag will ramp up production of side-by-side models from its new Reynosa, Mexico, refrigerator plant in April and begin sales of new top-mount refrigerator-freezers made by Daewoo later in the year.
Closing the Galesburg plant and shifting production to the new facilities is expected to yield higher quality and more competitive pricing while generating annual savings of $35 million, Hake said.
Maytag’s turnaround strategy for Hoover is in place, Hake said. Hoover plans 15 new product introductions in 2004, and described a new labor contract with the company’s Hoover union in North Canton, Ohio, as a model for the kind of manufacturing flexibility needed to compete with inexpensive imports.
Maytag’s challenges in the upcoming year include negotiating new labor contracts to replace those expiring in September at Maytag’s refrigerator plant in Amana and in June at at Maytag’s laundry plant in Newton. Hake said the company, particularly at Newton, will seek to examine with the union leadership ways to make the plant more competitive and cost effective so that it can be eligible for new investments and jobs.
Maytag shares gained 55 cents on Thursday to close at $28.55 on the New York Stock Exchange.
From Billing Gazette