Whirlpool boasts $320 million in net earnings

By Tony Wittkowski | Business Reporter | The Herald-Palladium

BENTON HARBOR — Whirlpool Corp. posted a higher-than-expected net profit for its second quarter, as revenue growth and cost reduction initiatives offset the unfavorable foreign exchange rate, the company reported Friday.

The Benton Harbor-based home appliance maker reported net income of $320 million in its second quarter, up from $177 million a year ago.

In a conference call with shareholders Friday, Whirlpool officials said ongoing business earnings per share was $3.50, up from $2.70 in the same period last year. Analysts had expected $3.36.

“We delivered another quarter of record earnings and margin expansion while overcoming challenges in several key countries,” said Jeff Fettig, chairman and chief executive officer of Whirlpool. “Our leading portfolio of brands, innovative new products and strong ongoing cost productivity programs have enabled us to continue creating significant value for our shareholders.”

The second-quarter operating profit totaled $366 million, or 7 percent of sales, compared to $273 million in the same prior-year period. The second-quarter ongoing business operating profit was $435 million, or 8.4 percent of sales, compared to $355 million in the same prior-year period.

Second-quarter net sales of $5.2 billion remained flat compared to the same prior-year period. However, if the impact of currency is excluded, sales increased by 3 percent.

For the first half of 2016, Whirlpool reported cash used in operating activities of $404 million compared to $397 million in the same prior-year period. Whirlpool reported free cash flow of $547 million in the first six months of 2016 compared to $619 million in the same prior-year period.

For the full-year outlook, Whirlpool expects to report earnings per diluted share of $11.50 to $12 and ongoing business earnings per diluted share of $14.25 to $14.75.

Fettig said he anticipates Whirlpool to generate cash from operating activities of $1.4 million to $1.5 million and free cash flow of $700 million to $800 million. Included in this guidance are acquisition-related restructuring cash outlays of up to $200 million, legacy product warranty and liability costs of $155 million and capital spending of $700 million to $750 million.

“As we have demonstrated over the past five years, we continue to rapidly respond to a volatile global environment and deliver record results by growing revenue, expanding margins and generating cash,” Fettig said in Friday’s conference call.

Whirlpool’s stock closed Friday at $187.61 per share on the New York Stock Exchange, a 0.3 percent increase from the day’s opening price of $187 per share.

Regional results

Whirlpool North America reported second-quarter net sales of $2.8 billion, compared to $2.7 billion in the same prior-year period. Excluding the impact of currency, sales increased 4 percent.

The region reported a second-quarter operating profit of $340 million, or 12.3 percent of sales, compared to $287 million in the same prior-year period.

Whirlpool expects full-year 2016 industry unit shipments in the U.S. to increase by 5 to 6 percent.

“We are well-positioned to deal with continued global volatility and have already deployed strong plans to deliver our goals in a global environment that continues to be challenging,” said Marc Bitzer, president and chief operating officer of Whirlpool.

Whirlpool Europe, Middle East and Africa reported second-quarter net sales of $1.3 billion, down slightly from same prior-year period. Excluding the impact of currency, sales were flat.

The region reported second-quarter operating profit of $46 million, or 3.5 percent of sales, compared to $51 million in the same prior-year period. The company continues to expect full-year 2016 industry unit shipments to be flat to up 2 percent.

Whirlpool Latin America reported second-quarter net sales of $826 million, compared to $854 million in the same prior-year period. Excluding the impact of currency, sales increased by 4 percent.

The region had a second-quarter operating profit of $50 million, or 6.1 percent of sales, compared to $36 million in the same prior-year period. Bitzer said the profit was driven by favorable price mix, unit volume growth and benefits from cost and capacity-reduction initiatives.

The company expects full-year 2016 industry unit shipments in Brazil to decrease by 10 percent.

Whirlpool Asia reported second-quarter net sales of $363 million compared to $381 million in the same prior-year period. Excluding the impact of currency, sales were flat.

The region reported a second-quarter operating profit of $16 million, or 4.4 percent of sales, compared to $27 million in the same prior-year period. Ongoing business segment operating profit totaled $29 million, or 8.1 percent of sales, compared to $31 million in the same prior-year period. The change was primarily driven by ongoing cost productivity and volume growth.

The company expects full-year 2016 industry unit shipments to be flat.

Contact Tony Wittkowski at twittkowski@TheHP.com or (269) 932-0358. Follow him on Twitter: @tonywittkowski.

(Author’s Note: This article was originally published on July 23, 2016)

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