Maytag profits rise as charges decline
Maytag Corp., which has been trying for a year to jump-start a recovery, said its fourth-quarter net income rose more than seven fold as it experienced fewer charges related to restructuring and profits surged in its line of home appliances.
Net income climbed to $23.9 million, or 30 cent per share, from $3.3 million, or 4 cents, a year before. Excluding costs related to restructuring, losses on investments and other costs, operating income dropped 9.3 percent to $43.8 million, or 55 cents, from $48.3 million, or 62 cents. On that basis, the results exceeded the 52-cent average forecast of Wall Street analysts polled by Thomson First Call. Revenues rose 12.8 percent to $1.27 billion from $1.13 billion.
Over the past year, the Newton-based company, the No. 3 U.S. manufacturer of appliances, has been introducing a variety of products, including washing machines and dryers, in an attempt to counter an industry-wide drop in sales as consumers choose less expensive models or forgo purchases of new appliances altogether.
Profits continue to be squeezed, however, at Maytag’s floor-care division, which includes the Hoover line of vacuum cleaners, as customers have consistently chosen cheaper machines. The company’s stock price is largely unchanged from a year ago, even though major U.S. stock indexes produced double-digit returns.
“Our operating income, excluding the items reflecting comparability, was down for the quarter and for the year, primarily as the result of the decline in profitability in the floor-care business,” Chairman and Chief Executive Ralph Hake said in a statement.
For the coming year, Hake said, the company expects less than 10 percent growth in sales of major appliances and floor-care products and that prices for those products will continue to fall. Hake said he expects sales from both of those divisions to outpace those of their rivals and that new products and agreements with suppliers and cost-cutting measures should increase profit margins.
The company is also planning to break out Hoover’s results in its quarterly financial statements, beginning in the current quarter, in a move that is expected to increase accountability for Hoover’s managers. Currently, the company reports earnings results for two business segments, major appliances and commercial appliances. It now plans to add a housewares segment, which will include Hoover and Maytag’s houseware products.
Hake said a labor contract signed Dec. 9 with members of the International Brotherhood of Electrical Workers at a Hoover plant in North Canton, Ohio, will give management more flexibility as it works to further streamline production.
Operating profits at Maytag’s major appliances business rose 81 percent to $65.6 million from $36.1 million a year earlier. Sales rose 12.8 percent to $1.22 billion from $1.1 billion.
Maytag said new products, including a line of dishwashing machines that feature tall tubs, refrigerators that have French-style freezer doors and recently redesigned cooking products that are durable enough to withstand the heat generated by cooking but stylish enough to be used at the table, are helping boost results. During the fourth quarter, Maytag introduced a new dryer and a top-loading washing machine in its Neptune line of products.
During the coming year, Hake said, innovation would continue. Specifically, he said he expects a home water filtration system, a small vending machine for beverages called the Skybox and small upscale appliances made under the Jenn-Air Attrezzi brand to sell well.
Within Maytag’s commercial appliances division, losses widened to $2.73 million from $1.86 million. Revenues at the division, which makes vending machines and commercial cooking equipment, rose 13.1 percent to $48.3 million from $42.7 million. Corporate expenses rose 23.8 percent to $15.5 million from $12.5 million.