NEWTON, Iowa – Appliance makers Whirlpool Corp. and Maytag Corp. on Tuesday reported lower second-quarter earnings as consumer spending on major appliances around the globe remained soft.
Whirlpool, the No. 1 U.S. maker of home appliances, said its second-quarter earnings fell 56 percent, as a result of flat sales and restructuring charges. Maytag, the No. 3 home appliance maker, said its earnings fell 66 percent, before the effect of an accounting change, as sales of vacuum cleaners and floor care products slumped.
Whirlpool expects to see strong year-over-year improvement during the third and fourth quarter of the year and will end the year with core earnings improvement of 10 percent to 15 percent, said David Whitwam, chairman of the Benton Harbor, Michigan-based company.
Maytag's third quarter earnings should look ``much like'' the first quarter, said Ralph Hake, chairman of the Newton, Iowa-based company. Maytag earned 43 cents per share in the first quarter. He said earlier that he expected improvement in the second half of the year over the first half.
Analysts' consensus EPS estimate for the third quarter is 43 cents per share, according to research firm Thomson Financial/First Call. Maytag earned 74 cents per share in the prior-year third quarter.
Shares of Whirlpool were up $1.41 to $69.50 in New York Stock Exchange trading on Tuesday, their highest level since November. Shares of Maytag were up 54 cents to $31.75 on the NYSE. Whirlpool's stock has outperformed competitor Maytag by about 43 percent since the beginning of the year.
WHIRLPOOL EARNINGS FALL, SALES FLAT
Whirlpool reported second-quarter earnings of $88 million, or $1.30 per share, before charges and a one-time loss from discontinued operations. Net earnings were $53 million, or 78 cents per diluted share. That compared with $121 million, or $1.66 per share, a year ago.
Analysts' estimates ranged from $1.24 to $1.30, with a mean of $1.27, according to First Call.
Net sales of $2.6 billion were level with the prior year quarter and up 4 percent absent currency translations.
``Particularly noteworthy for the second quarter was the strength of our North American and Latin American performance,'' Whitwam said.
Whirlpool's North American net sales rose 5 percent in the second-quarter despite a 5 percent drop in U.S. industry unit shipments. Operating profits fell 10 percent, due to the competitive environment and increased spending for new product introductions, the company said.
Latin America's operating performance was in line with the company's expectations for the quarter, rising 8 percent excluding currency translations, despite an energy shortage in Brazil that caused an economic and appliance industry slowdown, Whirlpool said. Sales in Europe and Asia both fell 2 percent excluding currency translations.
During the quarter, the maker of appliances under brand names such as Whirlpool and KitchenAid said it recorded a pre-tax charge of $21 million for restructuring and related activities. So far the restructuring effort has resulted in a pre-tax charge of about $91 million and is expected to produce savings of about $40 million in 2001, increasing to about $70 million annually.
In total, the restructuring effort is expected to result in pre-tax charges of $300 million to $350 million. Whirlpool has so far eliminated 3,000 positions, or about 5 percent of its global work force. It will announce more of its restructuring plans in the third and fourth quarters.
MAYTAG SALES FALL, COSTS INCREASE
Maytag reported second-quarter earnings of $25.5 million, or 32 cents per share before the accounting change, compared with $75.7 million, or 92 cents per share, a year ago. Analysts' earnings estimates ranged from 32 cents to 33 cents, with a mean of 32 cents per share, according to research firm Thomson Financial/First Call.
Maytag's revenues fell 3.2 percent to $1.07 billion. Net income including the accounting change was $21.8 million.
Maytag, which makes Jenn-Air, Magic Chef, Maytag and Admiral appliances, has increased spending in product development and in strengthening its brands to help improve growth, Hake said. But those costs also weighed on second quarter results. The company's acquisition of Amana Appliances, still on track to close in the third quarter, will help it reduce its cost structure and improve its major appliance business, Maytag said.
Home appliance sales, which include floor care, dipped to $941.9 million, from $948.8 a year ago. Sales of major appliances rose in the quarter, Maytag said, but operating income in the segment plunged 51 percent.
Vending and food service products sales fell 18 percent, with operating income was down 72 percent, Maytag said. It is exploring the potential sale of its commercial foodservice businesses, G. S. Blodgett and Jade Products.
There were 4 percent fewer diluted shares of stock outstanding in this year's second quarter compared to a year ago due to the company's share repurchase program, Maytag said. Diluted EPS, including the cumulative effect of an accounting change, was $1.08.
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