Executive Message
Contents || Corporate ListingsDear Shareowners, Employees and Friends:
1998 was another year of impressive growth for Maytag. Sales and net income rose to record levels, eclipsing the previous highs set just a year earlier by 19 percent and 56 percent, respectively. That outstanding performance further demonstrates the corporation's ability to achieve profitable growth and create value for all our constituencies in a very competitive business environment.
Maytag's financial strength and strong cash flow in 1998 allowed us to increase dividends to shareowners again, repurchase shares of our stock more aggressively than anticipated, retire some high coupon debt to reduce future interest expense, and fund additional product innovation initiatives designed to provide profitable growth in the future.
We were pleased that the investment community took note of these actions, as well as our stellar business performance, and the price of Maytag stock reached record levels.
During 1998, we achieved solid sales growth and market share gains in major appliances, floor care products, vending machines and commercial laundry equipment. Maytag International's export business continued to grow, and we had a full year's sales of our Blodgett commercial cooking products.
Extremely favorable economic conditions in the United States in 1998 created a very receptive and responsive selling environment for both our home and commercial products.
In the context of that environment, Maytag distinguished itself and out-paced the competition. A major reason for that is our strategic focus on Intelligent InnovationSM.
The lion's share of our sales growth in 1998 came from the procession of innovative new products we introduced during 1997. Products that created initial marketplace excitement when they debuted in 1997 Ð like Maytag high-efficiency washers and newly designed refrigerators, Hoover WindTunnelTM vacuums and SteamVac UltraTM extractors Ð generated sales momentum for the full 12 months of 1998. Also, Dixie-Narco's enhanced capacity vending machine was a star performer for the second consecutive year.
Profitable growth continues to be Maytag Corporation's prime objective. It's the path we've chosen to create true value for all of you who have a vested interest in our success. The cornerstones of our strategy to accomplish profitable growth are intelligent product innovation and financial discipline.
Our emphasis on innovation is aimed at creating products with superior performance Ð products that clean better, cook better, preserve food better and dispense beverages more effectively. Our emphasis on financial discipline leads to value-added products that give consumers benefits and performance they want and are willing to pay for, because these products make life simpler and easier at home or at work.
Intelligent InnovationSM is our game plan for success in the marketplace. It's how we win with consumers, reinforce the strength of our premium brands, increase sales volume in the upper price segments of our product lines, and enhance profit margins.
Our commitment to innovation continued throughout 1998. Among our new product introductions last year were totally redesigned refrigerators with side-mounted freezers, home and commercial front-loading high-efficiency washers with dryers stacked above them, dishwashers with a sanitization feature, Self Propelled Hoover WindTunnelTM vacuum cleaners, new commercial floor care products, and glass-front beverage venders.
Rongshida-Maytag, our joint venture in China, introduced new washer models in 1998, and they acquired another washer manufacturing company to increase production capacity and compete more effectively in southwest China. Late last year, Rongshida-Maytag opened its new refrigerator manufacturing plant and began production of RSD brand refrigerators Ð a new product category for the company.
Our focus on product innovation supports another key element in our growth strategy: increasing business with key customers. In the spring of 1998, Sears, Roebuck and Co. began carrying the full line of Maytag brand major home appliances for the first time in history. In the fourth quarter of last year, we added Sears Canada to our roster of Maytag brand dealers. Additionally, we have strengthened and expanded our relationships and business with all our key dealers, distributors and commercial customers.
Our distribution is strong and growing. Today, Maytag Corporation has more home and commercial products than ever before, and those products are in front of more customers and consumers than ever before.
As we grow and partner with our customers, we also continue to strengthen and fine-tune our own organization. In August of last year, William Kerr became a member of Maytag's board of directors. Bill is chairman and chief executive officer of Meredith Corporation, one of the country's leading media and marketing companies.
Additional personnel reassignments and organizational refinements were made in 1998, all of which underscore the fact that performance-driven change continues to be the paradigm of Maytag. Over the past six years, the changes at Maytag have been purposeful, thoughtful and sequential. They have been directed specifically at strengthening our heritage premium brands through product innovation and improved performance; sharpening our consumer knowledge, awareness and service; increasing our business with key customers and serving their individual needs better and more effectively; investing in new growth opportunities; and raising financial management and discipline to new heights.
These changes have accomplished their intended results: profitable growth for the corporation, and increased value for our shareowners, customers, consumers and associates.
Our game plan for 1999 is the same as it was in 1998 Ð more product innovation, more investing for future growth, more repurchase of Maytag stock.
In the first quarter of 1999, we announced significant and exciting changes in models of our Maytag top-loading washer line. We've also enhanced our Magic Chef® and PerformaTM by Maytag washers, made further improvements in various cooking products, and our new RSD brand refrigerators have moved into the Chinese market. All in all, we'll bring some 20 product innovations to market in 1999.
We'll also benefit in 1999 from a full 12 months' sales of all our 1998 product introductions and a full year of Maytag brand sales through our expanded distribution network. Additionally, our first quarter 1999 acquisition of Jade Range will add to our sales of upscale home and commercial cooking products.
Although economic growth in the United States may slow somewhat in 1999, we expect factors like interest rates, inflation and employment to remain very favorable. That bodes well for Maytag's businesses. Our plan calls for us to exceed the growth rates of the industries in which we compete and, if the economy remains strong, our 1999 sales and earnings should surpass the record levels of 1998.
Thank you for your continued interest and support.
Leonard A. Hadley
Chairman and Chief Executive Officer
Lloyd D. Ward
President and Chief Operating Officer