Shares of Maytag Corp. fell nearly 3 percent on Tuesday after the No. 3 U.S. appliance maker said third-quarter and full-year profit would come in significantly below expectations. Maytag, which has agreed to be acquired by larger rival Whirlpool Corp. for about $1.7 billion, blamed higher fuel and distribution expenses, its fixed manufacturing costs, and unfavorable pricing at its Hoover vacuum unit.
“Weighing on earnings is the company’s high cost structure, including continued issues with weak performance at Hoover,” Morgan Keegan analyst Laura Champine said in a research note.
Champine added that Maytag’s continual earnings misses and its pending buyout by Whirlpool render price-earnings multiples useless.
The Newton, Iowa, maker of Maytag, Jenn-Air and Amana appliances said late Monday that despite improved sales in the first two months of the third quarter, it expects to post a loss for the period. Full-year results would significantly lag prior guidance of profit between 45 cents and 55 cents a share, the company added.
Maytag, which has seen profits decline in recent years as it competes with lower-cost rivals, also said it expects significant costs from the buyout by Benton Harbor, Michigan-based Whirlpool. The deal is expected to close early next year if regulators approve it.
A combination of the two companies would create the world’s largest appliance maker.
Maytag shares were down 53 cents, or 2.9 percent, at $18.01 in early New York Stock Exchange trading, below Whirlpool’s offer of $21 a share. Whirlpool stock slumped $2, or 2.6 percent, to $74.25.
From MSN Money