Whirlpool Corp. said today it will reduce its workforce by more than 5,000 positions, mostly in North America and Europe, amounting to about a 10% workforce reduction in those regions.
Salaried Position Reductions. Approximately 1,200 salaried positions will be eliminated.
Fort Smith, AR. The refrigeration plant in Fort Smith will close by mid-2012. Production will be consolidated into existing North American manufacturing sites.
Neunkirchen, Germany. Dishwasher production in Neunkirchen will move to Poland in January 2012.
Additional but unspecified steps will be taken to enhance organizational efficiency in North America and Europe. Whirlpool expects to reduce its overall capacity by approximately 6 million units.
"As we previously indicated, in a period of uncertain economic growth and consumer demand, we would be prepared to take the necessary actions in order to expand our operating margins and improve our earnings," said Whirlpool Chairman and CEO Jeff M. Fettig. "Given the weakening global economic environment, we are today announcing aggressive plans that will result in substantial cost and capacity reductions. The plans are the result of a comprehensive global review of our operations, products and manufacturing facilities."
Whirlpool today announced third-quarter 2011 net earnings of $177 million, compared to net earnings of $79 million during 3Q 2010. Sales in 3Q 2011 were $4.6 billion, compared to $4.5 billion in 3Q 2010, for a 2% increase driven by favorable currency.
3Q 2011 operating profit was $136 million, compared to $234 million in 3Q 2010. Whirlpool said the benefits of its ongoing productivity and cost reduction initiatives and previously announced price increases were offset by negative factors.
"During the quarter, we experienced weaker than expected global industry demand and elevated material costs," said Fettig. "We are beginning to see the benefits from previously announced price increases. However, our results were negatively impacted by recessionary demand levels in developed countries, a slowdown in emerging markets, and high levels of inflation in material costs.
"We are taking necessary actions to address a much more challenging global economic environment," Fettig said. "We believe our cost and capacity reduction initiatives, recently announced cost-based price increases and innovative product launches will enable us to expand operating margins and deliver long-term value to shareholders."
Whirlpool now sees its outlook for 2011 GAAP diluted earnings per share in the range of $4.75 to $5.25 compared with its previous estimate at the low-end of the range of $7.25 to $8.25 per share.
The company now expects to generate free cash flow between -$150 million and -$200 million for the full year compared to its previous estimate of $160 million to $260 million. This guidance includes approximately $350 million of U.S. energy tax credits and $250 million to $300 million of BEFIEX credit monetization. U.S. cash pension contributions are expected to be at approximately $300 million.
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