ATLANTA (Reuters) – Maytag Corp., the nation’s third-largest home appliance maker, Tuesday reported a 63 percent drop in second-quarter profit on weakness in its floor-care sales.
Maytag (MYG: down $0.70 to $25.65, Research, Estimates), whose Hoover floor-care unit is scrambling to bring lower-priced vacuums to market to meet the demands of bargain-hungry consumers, said that although major appliance industry unit sales were up about 1 percent in the quarter, floor-care products saw declines in volume and pricing as industry sales slumped.
In a statement, Maytag said the floor-care industry was down nearly 9 percent in April and May. It also said increases in steel, pension and retiree medical costs hurt profits.
The floor-care weakness continues a trend seen in the first quarter, when Maytag said Hoover’s 2003 performance would be “far below” historic levels as it scrambles to introduce cheaper vacuums. The company has moved to restructure Hoover, bringing in a new president and marketing executive.
The Newton, Iowa-based maker of Jenn-Air, Amana and other brand-name appliances had net income of $25.2 million, or 32 cents a share, compared with $68 million, or 86 cents, a year earlier. Included in the 2003 results were after-tax restructuring charges of $18.8 million, or 24 cents a share, related to the closure of a manufacturing plant in Illinois and work force reductions.
Analysts’ earnings estimates ranged from 51 cents to 60 cents a share, with a mean of 56 cents, according to Reuters Research, a unit of Reuters Group PLC.
Maytag also affirmed full-year 2003 earnings in the range of $1.80-to-$1.90 a share, including pretax restructuring charges of about $60 million, or 50 cents a share. The Reuters Research estimate for Maytag’s 2003 profit is $2.22.
Sales fell about 3 percent, to $1.16 billion from $1.19 billion, in the year-earlier second quarter.
Maytag also is challenged by increasing competition in the home appliance industry from foreign makers. To cope, Maytag is cutting jobs and moving much of its appliance production to lower-cost areas such as Mexico.
So far this year, Maytag shares have fallen about 11 percent.
Original article from CNN here