ATLANTA – Appliance maker Maytag Corp. (MYG) posted a quarterly loss on Friday on restructuring and litigation charges, and slashed its full-year profit forecast, citing higher steel costs.
"It's a messy quarter and a bad quarter," said Morgan Keegan analyst Laura Champine. "The real question is, how does this impact results going forward, and I think slashing the (full-year) earnings guidance in half is an indication."
Maytag, based in Newton, Iowa, reported a second-quarter loss of $41.1 million, or 52 cents a share, compared with a profit of $25.2 million, or 32 cents a share, a year earlier.
The latest quarter included charges totaling 61 cents a share for a major overhaul aimed at cutting costs, litigation over front-load washers, writing down the value of its commercial products business, and an adverse judgment in a lawsuit with distributors.
Maytag said second-quarter sales slipped 1 percent to $1.15 billion. Sales of major appliances rose 2 percent, but Maytag lost market share as the gain trailed industry unit growth of 9.7 percent. The company was hurt by a strike at a laundry-products plant and rising costs of steel.
In the housewares segment, sales dipped 14 percent as the Hoover vacuum unit lost market share at both lower- and higher-priced levels in the face of lower retail orders. Maytag, which is introducing new vacuums and moving to cut Hoover's costs, had expected a recovery in the unit, which has suffered declining sales and profit for more than a year.
"Hoover is in a lot of trouble," Champine said. "There's so much (price) deflation — and the new entrants are extremely aggressive on the high and low end — that it's hard to see how that unit becomes more competitive over time."
Commercial product sales fell 8 percent due to a decline in the vending industry, Maytag said.
In a statement, the company called the second-quarter performance "disappointing" and said the three-week strike at an Iowa laundry products plant cost it more than $5 million. Maytag recently reached a contract agreement with the union representing workers at the plant.
The appliance maker slashed its full-year earnings forecast, citing rising steel costs and inventory reductions. It now expects earnings of 20 cents to 30 cents per share after charges of 80 cents a share for its restructuring.
In June, when Maytag announced plans to cut 1,100 salaried jobs and merge Hoover with other units in a major overhaul, it forecast full-year earnings of $1 to $1.10 a share after special charges of $1 a share.
Maytag shares fell 17 cents to $21.28 in New York Stock Exchange trading on Thursday. So far this year, they are down 24 percent.