Maytag’s 3Q loss steeper than expected | VailDaily.com
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Maytag’s 3Q loss steeper than expected

DES MOINES, Iowa – Maytag Corp., the nation’s No. 3 appliance maker that is being acquired by bigger rival Whirlpool Corp., on Friday reported a steeper than expected third-quarter loss, as results were hampered by excess capacity and high prices for oil and materials.Maytag reported a loss of $18.2 million, or 23 cents per share, versus a prior-year profit of $7.5 million, or 9 cents per share. Sales rose 6.5 percent to $1.26 billion from $1.19 billion a year ago. The latest quarter included restructuring charges of 2 cents per share, compared with 16 cents per share in last year’s third quarter.Wall Street expected a 4-cent-per-share loss, the average estimate of six analysts surveyed by Thomson Financial.Maytag said excess manufacturing capacity in some products “continues to worsen,” as consumers buy items that Maytag sources from cheaper manufacturers, the company said.CEO Ralph Hake told industry analysts in a conference call that the company expects to close a deal to borrow $650 million in the next quarter, which will permit the company to move ahead with plans to close factories and consolidate production.”The challenge is to replace the products and revenue stream from our underutilized facilities with improved products at dramatically lower costs,” he said. “This involves product redesign, some sourcing and migration of products from our high-cost laundry and floor care facilities. When complete, we envision a manufacturing footprint with lower costs, higher utilization and fewer locations.”Hake has frequently said the flagship factory in Newton, Iowa, is among the company’s highest-cost laundry-appliance plants.Workers there have seen employment numbers shrink to around 1,000 in recent months, the lowest employment in nearly 60 years. The factory had 2,500 workers three years ago.UAW Local 997 President Ted Johnson said workers continue to leave the Newton plant for new jobs, anticipating an announcement of a plant closing any day.”They’re just tired of the stress and the insecurity and they’re just going somewhere else,” he said.The Hoover plant in North Canton, Ohio, has also seen hundreds of workers laid off and Maytag announced in July that it would move a production line to a plant in the Southwest.Newton-based Maytag also said it may take additional restructuring charges, asset impairments and accelerated depreciation, moves it is considering to reduce excess manufacturing capacity and improve financial performance.Hake acknowledged that significant changes in production in two major product categories without customer disruption will be “both a planning and an execution challenge.”Whirlpool agreed in August to buy Maytag for $1.7 billion in cash and stock, topping an offer by an investor group headed by Ripplewood Holdings LLC.Hake said Maytag shareholders will vote on the proposed Whirlpool purchase on Dec. 16. Both companies said they expect the deal to close as early as the first quarter of 2006.Maytag shares rose 7 cents to $17.26 on the New York Stock Exchange in early trading. The stock has traded in a 52-week range between $9.21 and $21.39. Whirlpool was 11 cents lower, at $74.26.—On the Net: Maytag Corp.: http://www.maytagcorp.comWhirlpool Corp: http://www.whirlpoolcorp.com


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