Whirlpool comes up short as stock falls

By Tony Wittkowski | Business Reporter | The Herald-Palladium

BENTON HARBOR — A strong dollar and softer appliance demand forced Whirlpool Corp. to miss profit expectations, the company reported Tuesday.

The Benton Harbor-based home appliance maker reported its third-quarter net earnings of $238 million, or $3.10 per diluted share, compared to the $235 million accumulated during the same period in 2015.

Whirlpool’s revenue slipped to $5.25 billion from $5.28 billion a year ago, which missed the projected mark of $5.32 billion. During a Tuesday morning conference call to shareholders, Whirlpool officials said weakness in European sales amid the Brexit fallout offset some of the gains made in North America and Latin America.

Earnings per share from ongoing operations rose to $3.66 from $3.45. However, analysts expected an earnings per share of $3.86. Whirlpool officials said they anticipate 2016 earnings per share of $14 to $14.25 from ongoing operations, below analysts’ estimates of $14.61.

Jeff Fettig, chairman and chief executive officer of Whirlpool, focused on the increase of earnings per share from quarter to quarter.

“In a challenging external environment, we delivered record third-quarter ongoing earnings per share by leveraging our portfolio of leading brands, innovative new products and a focus on cost productivity,” Fettig said. “The fundamentals of our business are strong, and as a result of our operational execution we have delivered earnings per share growth of 18 percent year-to-date.”

Jim Peters, Whirlpool chief financial officer, said currency had a “top-line impact” among various regions. With the British pound losing value, Peters said some currencies have strengthened against the U.S. dollar, most notably in Canada and Brazil.

Whirlpool’s stock closed Tuesday at $152.09 per share on the New York Stock Exchange, a 10.7 percent decrease from the day’s opening price.

Third-quarter operating profit for the company totaled $370 million, or 7 percent of sales, compared to $329 million in 2015. Third-quarter ongoing business operating profit totaled $413 million, or 7.9 percent of sales, compared to $418 million in 2015.

“We remain focused on creating value for our shareholders and returning cash through our share repurchase and dividend programs,” Fettig said. “During the quarter, we saw some softness in appliance demand, particularly in the U.K. and the U.S.”

Regional efforts

Whirlpool North America reported third-quarter net sales of $2.9 billion, compared to $2.8 billion in the same prior-year period. Excluding the impact of currency, sales increased 3 percent.

The North America region reported an operating profit of $346 million, or 12.1 percent of sales, compared to $349 million in 2015. The company expects full-year 2016 industry unit shipments in the U.S. to increase by 3 to 4 percent.

Marc Bitzer, Whirlpool president and chief operating officer, said they anticipate a stronger fourth quarter and will remain on track to meet all of this year’s goals.

“We are pleased with the strong revenue growth and ongoing margin expansion in North America and Latin America that overcame industry softness and currency volatility,” Bitzer said. “In Europe, the U.K. environment remains challenging, but we continue to execute brand and product transitions, while adjusting our production levels to right-size our inventory.”

Whirlpool Europe, Middle East and Africa reported third-quarter net sales of $1.3 billion, compared to $1.5 billion in the same prior-year period. Excluding the impact of currency, sales decreased by 6 percent.

The region reported an operating profit of $40 million, or 3 percent of sales, compared to $32 million in the same prior-year period.

Whirlpool Latin America reported third-quarter net sales of $800 million, compared to $751 million in the same prior-year period. Excluding the impact of currency, sales increased by 2 percent.

The region reported an operating profit of $45 million, or 5.7 percent of sales, compared to $31 million in 2015. Bitzer said the operating profit was driven by favorable product pricing and benefits from cost and capacity reduction initiatives.

The company now expects full-year 2016 industry unit shipments in Brazil to decrease by 10 to 12 percent.

Whirlpool Asia reported third-quarter net sales of $338 million compared to $346 million in the same prior-year period. Excluding the impact of currency, sales increased 2 percent.

The region reported an operating profit of $15 million, or 4.4 percent of sales, compared to $24 million in 2015. The company expects full-year 2016 industry unit shipments to be either flat or down 2 percent.

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 Oct. 26, 2016)

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