From Maytag's Website:
BUSINESS ENVIRONMENT:
Overall, the general U. S. economic conditions continue to be positive. Key indicators, such as unemployment, inflation, interest rates, and housing activity remain very favorable.
MAJOR APPLIANCES
Shipments for the fourth quarter industry core five products (washers, dryers, refrigeration, cooking, and dishwashing) increased by mid single digit percents. Our period-over-period results did not show as much a gain for several reasons. Most importantly, in major appliances our premium brands increased by more than double the industry growth while we chose not to chase the value brand business, which was very price sensitive in the quarter. As a result, profits, margins and cash flow grew significantly greater than the market increase for the quarter. This is all in keeping with our premium brand and profitable growth strategy. Also, the fourth quarter of 1997 consisted of 14 weeks while the current quarter consisted of 13 weeks, representing a 7.5% difference in the number of days. For the full year, Maytag's growth in major appliance unit shipments exceeded the industry, with revenue growing at a much higher rate, once again attributable to the premium brand strategy.
FLOOR CARE
The vacuum industry reported a strong fourth quarter. This represents a significant turnaround from the first half of 1998 when the industry was softening. In the industry, Hoover was the only one breaking monthly records during that time. For the year, the vacuum industry ended at record levels with high confidence from major retailers and manufacturers.
COMMERCIAL APPLIANCES
Although the vending industry typically experiences a slowdown during the third and fourth quarters, this trend is being mitigated by strong industry demand for larger sized beverage containers. Dixie-Narco is enjoying record sales levels in this strong industry. The two dominant purchasers of vending equipment are expected to follow their previously stated intentions for expanded vending machine placement in this profitable distribution channel. This will continue to bode well for Dixie-Narco.
Commercial cooking is now reporting improved year-over-year performance. Year-end industry data shows low single digit percentage growth in commercial cooking.
EXPORT AND FOREIGN MARKETS
In spite of difficult international economic conditions, export sales of domestically produced products continued strong year-over-year meaningful growth for both the top and bottom lines. This is true for both the fourth quarter and full year 1998. This performance supports the position that there is a solid and growing demand for American sized appliances that offer meaningful benefits to selected overseas markets.
Maytag's joint venture (J.V.) in China recorded a 9% decline in sales for the quarter along with a $900,000 loss at the operating income line. Washer unit sales and average prices in the fourth quarter were down throughout China as their economy weakened. At the same time the laundry market is continuing its consolidation. Our partner, RSD, is emerging as one of the top three players. Revenues for the J.V. included minimal refrigeration sales, a new product introduced late in the year. Operating income was negatively impacted by a $1 million provision for doubtful accounts. For the year, the China J.V. recorded sales of $128 million, a 4.5% growth and $6 million in operating income for a 4.6% margin, which was negatively impacted by lower average prices and costs related to the new refrigeration plant. |
