Hoover Hurts Maytag Earnings

NEWTON, IOWA— New dishwashing, refrigeration and cooking appliances helped Maytag boost fourth quarter sales 12.8 percent in the company's major appliances segment, hitting $1.2 billion, up from $1.1 billion in the year-ago period.

Operating income for the majaps segment, including charges, soared 81.5 percent in the three months, ended Jan. 3, reaching $65.6 million, compared with $36.1 million in the fourth quarter of 2002.

Maytag's Hoover floor-care products proved to be a drag on both quarterly and yearly earnings. "Our operating income, excluding the items affecting comparability, was down for the quarter and for the year," said Ralph Hake, chairman/CEO, "primarily as a result of the decline in profitability in the floor-care business."

Hake cited a shift in the floor-care industry in 2003, toward products in lower price categories, which led to lower volume, margins and pricing at Hoover floor care, considered part of Maytag's majap segment.

For the 12 months, Maytag's majap segment reported sales of $4.5 billion, a 2.6 percent increase over the $4.4 billion recorded year-on-year. However, operating income for major appliances in the 12 months dropped 32 percent, to $269.1 million, from $395.7 million in 2002.

Maytag anticipates low single-digit growth in unit sales in the majap and floor industries in 2004, with continuing declines in pricing. It also anticipates outgrowing the industry in both categories and improving profitability through product launches, sourcing agreements and new efficiencies.

Consolidated fourth quarter sales also increased 12.8 percent, to $1.3 billion, from $1.1 billion, while net income, as reported, hit $23.9 million, compared with $3.3 million.

For the 12 months, consolidated sales rose 2.7 percent, to $4.8 billion, from $4.7 billion, while net income, as reported, was off 36.4 percent, to $120.1 million, from $188.8 million. Maytag chalked up lower earnings to floor care's decreased volume and profitability year-over-year.