Majap Vendors' Q3 Results Run Hot, Cold

By Jeff Malester On Oct 27 2003 - 8:00am

Three top major appliance manufacturers — GE, Electrolux and Maytag — experienced varied financial performances in the third quarter.

The consumer products segment at General Electric, namely major appliances, achieved double-digit earnings growth in the third quarter, hitting $114 million, an 18 percent jump over the $97 million recorded in the year-ago period.

However, GE's consumer products division suffered a 2 percent dip in sales during the third quarter, ended Sept. 30, down to $2.08 billion, compared with $2.12 billion in the same three months last year.

For the nine months, GE majap earnings climbed 10 percent, reaching $391 million, up from $356 million in the same period a year ago. Sales for this business were down 3 percent in the nine months, coming in at $6.1 billion, compared with $6.2 billion for the same period in 2002. Maytag, on the other hand, was negatively impacted by an after-tax restructuring charge of $8.8 million for a plant closing, which led to its third quarter operating income for the major appliances segment dropping 39.3 percent, to $68.5 million, compared with $112.8 million in the same quarter in 2002.

However, the company was encouraged by a strong third quarter for its majap business, which achieved a record three months for unit movement. Maytag posted a 4.8 percent majap dollar sales gain, reaching $1.15 billion, up from $1.10 billion in the same period a year earlier.

"Maytag appliances witnessed solid gains in market share as a result of new product introductions within an environment of strong industry shipments," said Ralph Hake, chairman/CEO.

Maytag's floor care products, part of its majap business, registered dramatically lower year-over-year sales volume, pricing and mix. However, floor care unit sales and earnings did improve marginally from the second quarter of 2003, said the company.

Maytag's majap segment sales were off slightly in the first nine months, down less than 1 percent, to $3.32 billion, from $3.34 in the same period a year ago. Operating income for the segment in the period was $203.6 million, down 42 percent from the $359.6 million recorded in last year's first nine months. The current period included an after-tax restructuring charge of $33.8 million.

Consolidated third quarter Maytag sales increased 4.6 percent, hitting $1.22 billion, up from $1.17 billion in the year-ago three months. Net income for the quarter slid to $36.6 million, down from $60.8 million year-on-year, nearly a 40 percent drop. Advertising expenditures tied to new product introductions and burden absorption tied to lower production levels joined the plant-closing charge in reducing profitability.

Electrolux reporting shipments of core appliances to North America increasing 9 percent in the third quarter, compared with the same quarter a year earlier. Sales of major appliances, spearheaded by room air conditioners and microwave ovens, also enjoyed "good growth," with industry shipments climbing 9 percent year on year, the company said.

Total Electrolux North American sales of consumer durables reached $1.44 billion in the third three months, moving up from the $1.4 billion recorded in the year-ago period.

However, operating income for consumer durables during the third quarter slipped to $69.8 million, down from the $74 million reported in the same quarter in 2002. Profit margin for the quarter decreased to 4.9 percent from 5.3 percent.

In the first nine months, Electrolux said U.S. industry shipments of core appliances increased in volume by about 3 percent. Shipments of major appliances also increased by 9 percent in the same time frame.

Total North American sales of consumer durables to North America in the first nine months hit $4.7 billion, down from the $5 billion recorded year over year.

Operating income for consumer durables in North America dropped to $317.8 million for the nine months, down from $358.1 million in the same period a year ago. Profit margin for the mine months was 6.8 percent, down from 7.1 percent.

Third quarter consolidated Electrolux sales decreased 4.3 percent, down to $3.9 billion, from $4.1 billion in the year-ago period.

Net income, excluding special items, dropped 6.3 percent, to $146.9 million, compared with $156.8 million year-on-year. Net income, including special items, was off 38.1 percent, to $98.4 million, down from $159 million in the same quarter last year. Electrolux recorded a charge of $48.5 million in the three months.

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