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Maytag Majap Sales Drop 2.8%

4/22/2005 09:03:00 AM Eastern

Newton, Iowa — Amid a difficult selling and cost control environment, major appliances maker Maytag reported lower first quarter sales, with its primary home appliance segment sliding 2.8 percent, to $1.11 billion, from a year-earlier $1.14 billion.

Maytag’s consolidated sales, which brings together its home products with its commercial offering, slipped even further in the first quarter, dropping 4.2 percent, to $1.17 billion, from $1.22 billion in the first three months of 2004.

Operating income for Maytag’s major appliance segment plunged 55.9 percent in the first three months, ended April 2, down to $26.6 million, from a year-ago $60.3 million. When commercial products are included, consolidated operating income for the first quarter was off 62.1 percent, to $24.1 million, from $63.6 million in the same period last year.

Consolidated net income for the first quarter was $7.7 million, compared with $38.7 million in the same three months a year ago.

Maytag said savings from restructuring activities implemented in 2004 only partially offset rising costs. Lower net sales and higher costs — primarily for steel and energy-related items, as well as higher distribution costs — reduced first-quarter, year-over-year profitability.

While the majap maker achieved gains that were anticipated through the “one company” restructuring efforts it has undertaken, Maytag said it is clear that not enough progress has been made.

“We must immediately take more aggressive steps to improve our cost position by reducing our manufacturing footprint,” said Ralph Hake, chairman/CEO. “This will require a manufacturing restructuring that addresses our noncompetitive supply chain costs and burden absorption issues.

“A new financing plan will fund these business initiatives,” continued Hake, “which will include a new credit agreement, and finalizing plans to refinance 2006 debt maturities.”

However, Hake did note Maytag’s market-share improvement in all major appliance categories in the first quarter, compared with the fourth quarter of last year. This he felt, signaled that company actions implemented to improve sales performance are taking root.

Hake expects further growth from new products scheduled for a first half launch. These include a Maytag Neptune 27-inch washer and dryer and a Jenn-Air suite of glass-front majaps. The company cited Jenn-Air premium appliance lines and the company’s value brands for posting strong first quarter gains.

Average selling prices were higher in the quarter, based upon recent pricing actions, however, these increases were largely offset by selected 2004 price repositioning and product mix.

Maytag reported that overall debt levels are down $126 million from the prior year, while cash and cash equivalents were increased by $91 million to $99 million.

In addition, inventories were down from the prior year. In 2004, Maytag had higher inventories for a refrigeration transition and new product introductions.

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