Whirlpool falls short of projections amid Brexit outcome

By Tony Wittkowski | Business Reporter | The Herald-Palladium

BENTON HARBOR — Due to a decline in appliance demand and United Kingdom sales after the country voted to leave the European Union, Whirlpool Corp. reported lower-than-expected earnings Thursday.

The Benton Harbor-based appliance maker reported its fourth quarter net earnings of $180 million, or $2.36 per diluted share, compared to $180 million, or $2.28 per diluted share, reported for the same prior-year period.

Fourth quarter ongoing business earnings per diluted share totaled $4.33 compared to $4.10 in the same prior-year period. While this was a year-over-year increase for its earnings per diluted share, Whirlpool missed the average analysts’ estimate of $4.44.

Whirlpool’s fourth quarter net sales were $5.7 billion, compared to $5.6 billion in the same prior-year period. Excluding the impact of currency, sales increased over 2 percent.

Sales in Europe, the Middle East and Africa dropped 6.7 percent to $1.4 billion. However, sales in North America accounted for those losses as it increased 6.9 percent to $3.1 billion in sales.

With the decline of the British pound as a result of the Brexit decision, Whirlpool reported margins shrunk by about $40 million in the U.K.

Jeff Fettig, chairman and CEO of Whirlpool, said the appliance company can expect to see a continual impact through the next two quarters from the Brexit vote, though it occurred in June 2016.

“We expect currency to have a more moderate impact in the next few years,” Fettig told investors Thursday. “We know it cost us $40 million in the third quarter and then $40 million again in Q4. We think it will lessen in Q1, but it looks to be a full year (by this June) before we see a positive benefit.”

Whirlpool’s stock closed Thursday at $173.94 per share on the New York Stock Exchange, a 8.5 percent decrease from the day’s opening price.

Fourth quarter operating profit for the appliance maker totaled $335 million, or 5.9 percent of sales, compared to $380 million in 2015. Fourth quarter ongoing business operating profit totaled $425 million, or 7.5 percent of sales, compared to $468 million in 2015.

When asked about President Donald Trump’s interest in keeping production in the United States during Thursday’s conference call with stakeholders, Fettig said they won’t have to worry about that since Whirlpool produces more in the U.S. than anyone else in the appliance industry.

“We have been a victim of illegal dumping in appliances,” Fettig said in reference to foregin competitors LG and Samsung. “The new administration was interested in gaining input from U.S. manufacturers about how they could make the industry even more competitive and add new jobs. Given our footprint in the U.S., we want competitive and fair trade.”

Regional efforts

Whirlpool North America reported fourth quarter net sales of $3.1 billion, compared to $2.9 billion in the same prior-year period. Excluding the impact of currency, sales increased 8 percent.

The North America region reported an operating profit of $348 million, or 11.1 percent of sales, compared to $340 million in 2015. The company expects full year 2017 industry unit shipments in the U.S. to increase by 4 to 6 percent.

Marc Bitzer, president and chief operating officer of Whirlpool, said they look forward to achieving their newly set goals in 2017.

“We have demonstrated our ability to effectively manage volatility in a disciplined and decisive manner,” Bitzer said. “We remain focused on delivering profitable revenue growth and improving working capital through operational execution and have high confidence that we will achieve our goals in the coming year.”

Whirlpool Europe, Middle East and Africa reported fourth quarter net sales of $1.4 billion, compared to $1.5 billion in the same prior-year period. Excluding the impact of currency, sales decreased 8 percent.

The region reported an operating profit of $17 million, or 1.3 percent of sales, compared to $88 million in 2015.

Whirlpool Latin America reported fourth quarter net sales of $860 million, compared to $845 million in the same prior-year period. Excluding the impact of currency, sales decreased 7 percent.

The region reported an operating profit of $70 million, or 8.1 percent of sales, compared to $58 million in 2015. Bitzer said the operating profit was driven by favorable product price and benefits from cost and capacity reduction initiatives partially offset by unit volume declines.

The company expects full year 2017 industry unit shipments in Brazil to be flat.

Whirlpool Asia reported fourth-quarter net sales of $352 million compared to $312 million in the same prior-year period. Excluding the impact of currency, sales increased 18 percent.

The region reported an operating profit of $18 million, or 4.9 percent of sales, compared to $5 million in 2015. The company expects full-year 2017 industry unit shipments to be flat to up 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 Jan. 27, 2017)

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