Maytag's Majap Operating Income Drops 42% During First Quarter
By Jeff Malester -- TWICE, 4/30/2001
NEWTON, IOWA — Even with strong sales of branded washers, dryers and dishwashers, Maytag found the overall competitive pricing environment during the first quarter — as well as higher operating costs and increased investment in new product development and advertising — offset the strengths in its product roll out.
Sales in Maytag's home appliance business during the first three months ended March 31, dropped 1 percent to $944.2 million, compared with $953.4 million the previous year.
Operating income for the first quarter in majaps dropped 41.8 percent to $85 million, down from $146 million in the same quarter last year.
Net income at Maytag fell nearly 60 percent to $34.3 million, compared with $75.9 million in the same quarter last year, before a tax benefit. With the benefit, net income was $76.3 million.
Operating margin for the majap segment, which also includes floor care, was 9 percent, a whopping 630 basis points below the 15.3 percent operating margin posted for the segment in the same three months in 2000.
"During this year's first quarter we had strong volume and market share gains in Maytag laundry equipment and dishwashers, as well as Hoover floor care products," said Leonard A. Hadley, CEO. "These strengths were offset by lower sales in our other home appliances, commercial foodservice equipment and vending machines."
Consolidated company sales for the quarter were $1.07 billion, down 1.7 percent from the $1.10 billion registered in the year-ago period. Consolidated operating income for the first quarter was off 47.9 percent to $74.6 million, compared with $143 million a year ago.
"Operating income was hurt by increased manufacturing and merchandising costs, plus increased advertising and a less favorable model mix in sales of floor care products," said Hadley.
"As we move through 2001, we will continue to face challenging economic and competitive conditions. We expect our second quarter earnings per share to meet or exceed the first quarter, excluding the tax benefit.
"Looking ahead, we remain focused on growing our core businesses and investing in new product development for the future," he added.
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