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Maytag Home Appliance Sales Jump 6.7%

10/21/2005 08:37:00 AM Eastern

Newton, Iowa — Increases in sales of major appliances drove up third quarter sales by 6.7 percent in the home appliances business at Maytag, hitting $1.20 billion, up from a year-ago $1.12 billion.

Maytag services continued to show strong revenue growth in the three months year-on-year, while sales of floor-care products decreased, even though unit sales climbed. The net sales drop was due to a continued decrease in floor-care product pricing and mix.

The manufacturer’s home appliances unit came in with operating income of $39,000 in the third quarter, ended Oct. 1, down from the $15.7 million recorded in the same three months in 2004.

Consolidated Maytag sales in the third quarter climbed 6.5 percent, hitting $1.26 billion, up from a year-earlier $1.19 billion.

The majap maker reported an operating loss of $582,000 in the third quarter, compared with a gain of $16.4 million in the same period last year. It registered a net loss of $18.2 million in the period, compared with net income of $7.5 million in the same quarter the prior year. Restructuring and related charges for the quarter hit $1.5 million, compared with $12.9 million in the same three months in 2004.

“Despite the top-line sales successes, our excess manufacturing capacity in some product categories continues to worsen as consumer demand shifts to our products that we source from lower-cost manufacturers,” said Ralph Hake, chairman/CEO.

“Also, higher raw material and transportation costs, primarily driven by increases in oil prices, negatively impacted the quarter,” he said. In addition to these expenses, Maytag said $8.5 million of net merger-related expenses impacted the quarter. Maytag and Whirlpool have signed a definitive agreement for Whirlpool to acquire Maytag.

“Maytag experienced strong growth in key product categories,” continued Hake. “During the quarter, there were strong sales gains in refrigeration and laundry, as well as solid growth in Jenn-Air branded appliances.”

For the nine months, Maytag home appliances sales rose 3.9 percent, reaching $3.48 billion, up from $3.35 billion year-on-year. Operating income decreased 8.8 percent in the period, down to $47.7 million, from a year-ago $52.3 million.

Consolidated nine month sales rose 2.9 percent, to $3.66 billion, from $3.56 billion in the same time frame last year. Operating income was $43.2 million, down 7.4 percent from the $46.6 million recorded year-over-year. Last year, operating income was negatively impacted by an $18.5 million charge and nearly $55 million for restructuring charges, compared with about $11 million in the current year. The net loss for the first nine months was $7 million, compared with income of $5.1 million year-on-year.

“Our performance demonstrates the need to urgently address our specific excess manufacturing capacity issues and eliminate these barriers to cost competitiveness and acceptable financial performance,” said Hake.

Actions to address these issues include restructuring charges, asset impairments and/or accelerated depreciation related to the affected operations and certain cash costs, said Hake.

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