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With major appliance sales down, and floor-care products "dramatically down," Maytag reported a 4.1 percent decline in its home appliances segment in the first quarter and announced it will cut 500 jobs. The majap industry overall reported sales off just 1.8 percent for the three months.
Maytag sales reached $1.07 billion in the first quarter, down from $1.12 billion in the year-ago period. Operating income for the majap segment decreased 34.6 percent in the first three months, reaching $77.8 million, down from $119 million year-on-year.
"Our major appliance sales were less than expected," said chairman/CEO Ralph Hake about the first quarter decline. "Cost increases for steel, pension and health care were expected to be offset by cost reductions, but these actions were insufficient in the first quarter."
Hake, who said Maytag will streamline its company during the second quarter, announced the elimination of 500 jobs, or 8 percent of its salaried positions. Maytag currently has 20,900 employees and 6,400 are on salary.
On the cost side, Hake said, "We have been prudent in managing inventories, and we have multiple initiatives in place that will help offset cost increases as we move further into the year." Looking ahead, the company expects business conditions to remain challenging in the second quarter.
Hake said nearly all company operations will be involved in Maytag's restructuring, and, when completed, the change is expected to generate current-year savings of about $20 million.
Maytag is looking to reduce expenses by $40 million in 2003, while the annualized savings from restructuring and other cost-savings initiatives are expected to be about $65 million. Maytag will incur second quarter charges of about $20 million.
Consolidated Maytag sales, which include majaps and commercial appliances, dropped 3.5 percent in the first quarter, down to $1.14 billion, compared with $1.18 billion in the year-ago three months.
Reported net income at the majap maker declined 39.3 percent in the first three months, ended March 31, hitting $34.5 million, compared with $56.8 million in the same quarter in 2002.
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