Significantly higher steel and energy-related costs resulted in lower major appliance sales and operating income in the third quarter at Maytag, with sales dipping 1.9 percent to $1.12 billion from a year-ago $1.15 billion, and income plunging 71.8 percent to $15.7 million from $55.8 million.
Even with year-over-year unfavorable comparisons, Maytag pointed out that progress has been made with sequential improvements from the second to third quarter of this year. “We are taking the right actions to improve Maytag's performance going forward,” said Ralph Hake, CEO. Hake cited the restructuring and consolidation of the company's floor care business along with majaps and corporate organizations, which lowered third-quarter costs and is expected to bring $150 million in annual savings.
Consolidated quarterly sequential sales in the third quarter tend to lend credence to Hake's optimistic overview. Third quarter sales of $1.19 billion were up from $1.15 billion in the second quarter of 2004. However, a year-over-year third quarter comparison shows consolidated sales decreased 2.9 percent, from $1.22 billion in the third quarter of 2003.
Consolidated third quarter net income of $7.5 million was an improvement over the second quarter's net loss of $41.1 million, but still fell 79.6 percent short of the $36.6 million net profit posted in the third quarter a year earlier.
Sequential gains in the third quarter, ended October 2, resulted primarily from higher sales of majaps and savings from cost-reduction efforts, said Maytag. Unfavorable year-over-year comparisons were caused primarily by lower floor care sales volumes and pricing, as well as the higher steel costs. Maytag reported a charge of $7.2 million for restructuring in the third quarter.
For the nine months, majap sales edged upward 1.9 percent, reaching $3.35 billion from $3.28 billion in the same period a year ago. But majaps was slapped with a 67.6 percent drop in operating income for the nine month period, coming in at $52.3 million, down from a year-over-year $161.6 million.;
Consolidated Maytag sales for the nine months rose 1.1 percent to $3.56 billion from $3.52 billion, while net income decreased 94.7 percent to $5.1 million from $96.3 million in the same period in 2003.