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Whirlpool Reports Q1 Results
Apr 21, 2003
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Whirlpool Corporation today announced first-quarter 2003 results, which the company says were in line with expectations. Net earnings of U.S. $91 million, or $1.32 per diluted share, compared to a net loss of $529 million, or $7.63 per diluted share, in the same period last year. The first-quarter loss in 2002 included one-time charges totaling $8.95 per diluted share for goodwill impairment (relating to a change in accounting principle) and restructuring activities. First-quarter net sales of $2.7 billion increased 6 percent from the same period last year. Excluding consolidated sales from the company's 2002 acquisitions -- Polar S.A. of Poland and Vitromatic S.A. de C.V. of Mexico -- net sales increased 2 percent. "Our businesses delivered a solid performance for the quarter, despite uncertainty in global markets and generally weak industry demand," said David R. Whitwam, Whirlpool Corporation's chairman and CEO. "Our operations significantly improved productivity and lowered costs, which helped partially offset year-over-year increases in pension, healthcare, energy and material costs. Benefits from restructuring also contributed to the earnings performance." First-Quarter Global Highlights Net earnings per diluted share of $1.32 were in line with expectations. Whirlpool North America posted record first-quarter sales. Whirlpool Europe and Whirlpool Latin America recorded solid operating profit gains in challenging environments. Whirlpool opened a new technology center in Pondicherry, India, in January. The center is part of the company's global product development effort. Reader's Digest (Europe) recognized the Whirlpool brand as the most trusted home appliance brand in France, Slovakia and Hungary. The Whirlpool brand Family Studio was introduced at the International Builders Show in Las Vegas. Family Studio includes a suite of innovative Whirlpool brand fabric care products, including the Duet(R) washer and dryer pair, Personal Valet(R) clothes vitalizing system, SinkSpa(TM) jetted clothes washing sink, and DryAire(TM) drying cabinet. Whirlpool Corporation recently earned an honorable mention in the Div2000.com annual listing of the United States' top 50 organizations for multicultural business opportunities. Fifteen thousand women- and minority-owned businesses selected the winners. Div2000.com is a business resource portal. First-Quarter Region Review Whirlpool North America's sales of $1.8 billion increased 5 percent from the prior year record period. Excluding Whirlpool Mexico, sales were up slightly. Operating profit declined 12 percent, due primarily to year-over-year increases in pension and employee-related healthcare costs. The company is currently evaluating additional measures to reduce the impact of these significant year-over-year cost increases. Savings from productivity improvements and restructuring partially offset the decline. U.S. industry unit shipments of major appliances (T7) declined nearly 2 percent from the prior year period. Based on current economic conditions, the company now expects full-year industry shipments to be flat compared to last year's level. The company had previously forecast an industry increase of 2 percent. During the quarter, continued strong demand for the Whirlpool brand Duet(R) washer and dryer pair strengthened the company's leadership in the high-efficiency laundry segment. Home Magazine selected the KitchenAid brand briva(TM) in-sink dishwasher as one of 12 winners of the publication's 2003 Kitchen and Bath Awards for ingenious performance innovation and artisan-inspired design. Whirlpool Europe's sales of $564 million increased 19 percent from the prior year period. (Excluding currency translations, sales decreased 1.8 percent.) The results reflect a solid performance in a challenging market where industry unit shipments declined by approximately 3 percent. Despite weak economic growth and low consumer confidence that negatively affected industry demand and pricing, operating profit doubled from the prior year period. Cost savings from improved total cost productivity and the benefits of restructuring contributed to the improvement. Based on current economic conditions, the company now expects full-year industry shipments to decline 3 percent from last year's level. The company had previously forecast an industry decline of 1-2 percent. During the quarter, the Whirlpool brand Dreamspace(TM) washer Whirlpool Europe's version of Duet(R) received top honors in comparison tests conducted by two leading consumer magazines in France. Whirlpool Latin America's sales of $306 million decreased 8 percent from the prior year period. (Excluding currency translations, sales increased 26 percent.) Market demand in Brazil declined 12 percent, while Whirlpool's unit shipments increased by 6 percent. Exports of major appliances through Whirlpool's global distribution network increased significantly. Despite the challenging external environment and lower tax credits, operating profit margin improved by 1.3 percentage points from the prior year period. The improvement was driven by product price increases and cost savings from productivity and restructuring efforts. Based on current economic conditions, the company now expects full-year industry unit shipments to decline 3-to-5 percent from last year's level. The company had previously forecast flat industry shipments. During the quarter, Brastemp brand introduced the Direct Cool(TM) refrigerator. Consul brand received the "Best in Refrigerators" award from the Brazilian Institute of Public Opinion and Statistics. Whirlpool Asia's sales of $92 million improved 8 percent from the prior year period. (Excluding currency translations, sales improved 4 percent.) The success of new product introductions helped drive the sales improvement throughout the region. India and China continued to record market share growth. Operating profit was moderately affected by price pressures and material cost increases. Based on current economic conditions, the company continues to expect full-year industry shipments to be flat to slightly up from last year's level. More than 30 new product models were introduced during the quarter, including Whirlpool brand's Direct Cool(TM) refrigerators with the Fast Forward Ice(TM) feature and a complete product range of refrigerators, clothes washers and microwave ovens. Outlook "We continue to see uncertain economic and geopolitical environments in most markets in which we operate," said Mr. Whitwam. "In this environment, Whirlpool operations will maintain the emphasis on productivity and other cost saving efforts as our global brands continue their rapid rate of innovative product introductions to consumers worldwide. In addition, we are evaluating measures to reduce the impact from year-over-year increases in pension and employee-related healthcare costs." Mr. Whitwam added: "Based on our revised industry outlook for Whirlpool's key markets around the world, we are revising full-year earnings-per-share guidance to $5.90-$6.10." The company had previously forecast full-year earnings per share of $6.20 to $6.40.

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