Strong Sales, Mixed Earnings For Majap Giants - Twice

Strong Sales, Mixed Earnings For Majap Giants

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Floor care once again proved to be the problem child in majaps, as the category dragged down earnings for at least two of the industry's Big Three players.

The exception was Whirlpool, which said strong sales and shipment performance in North America helped drive up first quarter sales by 10.7 percent to $3 billion.

Excluding currency translations, namely a weak dollar, net sales increased about 5 percent, while overall company earnings rose to $101 million during the period ended March 31.

Whirlpool sales in North America climbed 5.4 percent, reaching $1.9 billion. Industry demand was strong in the United States, it said, helping the company achieve sales, unit shipment, operating profit and cash flow records for the quarter.

Operating profit in the U.S. increased 17.7 percent, driven in part by effective brand and product mix management, as well as productivity gains. The improvement also was reflected in double-digit revenue increases in Whirlpool-brand and KitchenAid-brand products, as well as Whirlpool's homebuilder business.

U.S. industry shipments of majaps rose 7.6 percent in the period. Projecting out to the full year, the company expects U.S. industry shipments to rise 4 percent over 2003.

U.S. industry demand should be "moderately better than our previous forecast," said chairman/CEO David Whitwam. "We also expect to drive improved results through effective brand and product mix management and increasingly higher levels of productivity."

Meanwhile, at Maytag, successful implementation of new product models resulted in strong overall first quarter sales growth and market share improvement, the company said, with majap movement offsetting declines in its housewares segment.

Sales of majaps jumped 14 percent in the three months, ended April 3, hitting $947.3 million, while operating income, including restructuring charges, climbed 21.8 percent to $55 million. Excluding restructuring charges, majap segment operating income for the period was $63 million, up 15.5 percent year-on-year.

Claiming a gain in majap market share for the third consecutive quarter in an environment of strong industry growth, chairman/CEO Ralph Hake said, "The company's multiple product-launch strategy is being well executed, with new models entering the marketplace on schedule."

Hake cited the Neptune top-loading washer, Neptune Drying Center, and Maytag and Amana ranges and dishwashers as new products contributing to strong first quarter majap results.

Declines in the Maytag housewares segment, attributable to slower sales of Hoover floor-care products, triggered restructuring for cost improvement and greater flexibility as the company plays catch-up to healthier industry sales. Midline products are expected to build sales volume in the second quarter.

Housewares segment sales declined 16.4 percent in the first quarter to $178.8 million, while operating income slid 35.8 percent to $19 million.

Consolidated first quarter Maytag sales hit $1.2 billion, a 7.3 percent increase, while operating income fell to $63.6 million from $68.2 last year. Excluding restructuring charges, operating income reached $71.6 million, compared with $77.6 million year-on-year. Net income was $38.7 million in the first quarter, up 12 percent. Excluding restructuring charges, first quarter net income hit $44 million, up from $40.7 million last year.

Elsewhere, Electrolux enjoyed a 9.9 percent shipment increase in the United States during the first quarter, with "particularly good growth" for refrigerators, washers, dryers and cooking products. Room air sales were down substantially, however, even though combined shipments of ACs and microwaves increased 8 percent.

Nevertheless, Electrolux net sales of consumer durable products to North America in the first quarter dropped to $952.7 million from $1 billion year-on-year, while operating income dipped to $35.8 million from $50.6 million.

Consumer durable product sales also includes floor-care products, which increased in U.S. dollar volume but notched substantial declines in operating income and margin as a result of downward pressure on prices, an unfavorable product mix and higher costs for marketing and brand building.

The company said operating income for consumer durables in North America declined somewhat in Swedish kronas but improved in U.S. dollars. Margin was unchanged from the previous year as the positive impact from an improved product mix and higher productivity was offset by investments in product development and brand building.

Good U.S. majap performance factored into consolidated Electrolux sales did not put the company into positive territory. Net sales for the Electrolux Group in the three months ended March 31 edged down 4.9 percent to $3.9 billion, and consolidated operating income declined 59.6 percent to $93.9 million. Excluding items affecting comparability, operating income was off 5.2 percent to $220.6 million.

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