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Whirlpool Earnings Improve in Third Quarter
Oct 16, 2002
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Whirlpool Corporation said today it had 2002 third-quarter net earnings of U.S. $101 million compared to a net loss of $94 million in the same period last year. Net earnings per diluted share were $1.46 compared to a net loss of $1.40 per share in the third quarter of 2001. Net sales of $2.8 billion increased 6 percent. Excluding consolidated sales from recent acquisitions of Polar S.A. of Poland and Vitromatic S.A. de C.V. of Mexico, net sales increased 2 percent.

Third-quarter core earnings of $112 million increased more than 11 percent compared to $101 million in the third quarter of 2001. Core earnings per diluted share were $1.62 compared to $1.46 in the third quarter last year.

"Our regional businesses performed well during the quarter, despite economic pressures and uncertainties worldwide," said David R. Whitwam, Whirlpool's chairman and chief executive officer. "The solid results were driven by the success of our brands and innovation initiatives in the marketplace, such as our Whirlpool brand Duet clothes washer and dryer, and by the benefits of our restructuring initiative and productivity improvements."

U.S. appliance industry shipments for the third quarter were nearly 1 percent above the record shipments in the same period last year. The company expects fourth-quarter shipments to increase by approximately 2 percent.

"Retailer inventory levels appear to be appropriate to support projections for fourth-quarter sales," Whitwam added.

Global Highlights

Whirlpool says highlights of its third quarter include:

  • North America sales and operating profits surpassed a record third quarter in 2001.
  • Europe posted strong sales and solid margin growth.
  • Latin America operating profit margins improved significantly from second quarter of 2002.
  • Whirlpool's integration of recently acquisitions Vitromatic S.A. de C.V. and Polar S.A. was said to have proceeded quickly and efficiently during the quarter. Vitromatic was renamed Whirlpool Mexico S.A. de C.V. and the company says it is Mexico's second largest appliance producer and distributor. Polar is a leading home appliance producer in Poland.
  • Whirlpool Corporation received the 2002 National Design Award for Corporate Achievement from the Smithsonian Institution's Cooper-Hewitt, National Design Museum. The company says the award recognizes ingenuity and use of design as a strategic tool to advance the relationship between design and quality of life in the United States.

    North America

    Whirlpool North America posted record sales and operating profit in the quarter. Sales increased 6 percent from the same period last year, or nearly 1 percent excluding Whirlpool Mexico. Whirlpool says the market success of innovative products, such as the Whirlpool brand Duet washer, and a favorable mix contributed to the improvement.

    Operating profit increased 5 percent compared to the record level of third quarter 2001. Whirlpool Mexico integration costs affected operating profit margin, which declined slightly compared to the same period last year.

    During the quarter, the company introduced the Whirlpool brand Personal Valet clothes vitalizing system. Personal Valet removes wrinkles and odors from clothing and reduces the number of trips to the dry cleaner.

    Products to be introduced during the fourth quarter include the Whirlpool brand Polara refrigerated range and the Gladiator GarageWorks line of innovative storage systems and appliances for the garage.

    The company expects a solid fourth quarter operating performance based on the continuing execution of its brand strategies and savings from restructuring.

    Europe

    Whirlpool Europe's performance continued to show improvement, despite challenging economic and industry conditions in the region. Sales improved 17 percent compared to the same period last year, or 9 percent excluding currency translations.

    Operating profit margin improved by 1.5 percentage points from the same period last year. The margin improvement was due to increased sales, productivity gains and benefits from restructuring.

    Whirlpool Europe introduced versions of the Whirlpool brand Duet washer and dryer pair under the Whirlpool and Bauknecht brands. The company also introduced the first side-by-side refrigerators built specifically for the European market.

    The company expects industry appliance shipments in the fourth quarter to be flat compared to the same period last year. Whirlpool Europe continues to expect sequential improvement of operating margin in the fourth quarter.

    Latin America

    Whirlpool says its Latin America's sales were down 11 percent, or up 1 percent excluding currency translations, in a challenging economic environment. Operating profit margin of 8.3 percent declined 1.2 points compared to the same period last year, but improved nearly 4 percentage points above the second quarter of 2002.

    The sequential margin improvement followed the company's actions in the second quarter to reduce company and retail trade inventory and increase prices. Exports and benefits from restructuring are also said to have contributed to the improvement.

    Appliance industry unit shipments increased 1 percent during the quarter. The company expects industry shipments to be flat in the fourth quarter compared to the same period last year.

    As previously reported, Whirlpool is recognizing Brazilian government export incentive credits (Befiex) in 2002. Whirlpool said that it does not expect to utilize additional Befiex credits beyond the first quarter of 2003.

    Whirlpool says that, despite an uncertain economic and political outlook for Brazil, an ongoing focus on brands and customers, efforts to increase pricing, and benefits from restructuring are expected to lead to a continued solid performance. Whirlpool expects these actions will more than offset the reduction in Befiex credits in 2003.

    Asia

    Whirlpool Asia's sales increased 5 percent compared to the same period last year. The company anticipates strong growth in the fourth quarter from new product introductions - including new generation Whirlpool brand Ice Magic refrigerators - and expanded distribution in China and Southeast Asia.

    Outlook

    "We expect a solid fourth-quarter performance based on the strength of our global brands and the ability of our regional operations to continually create competitive cost advantages by leveraging the assets of Whirlpool's global platform," Mr. Whitwam said. Whirlpool said it remains comfortable with the current full-year Thomson Financial First Call consensus earnings estimate of $6.05.

    "In 2003, we will continue to improve performance by continuing our introductions of new and innovative products to consumers and by driving additional cost savings through productivity initiatives and the ongoing benefits from our restructuring initiative," Mr. Whitwam added.

    Whirlpool Corporation is based in benton Harbor, MI, U.S. It has annual sales of $10.3 billion, 65,000 employees, and almost 50 manufacturing and technology research centers around the globe. The company markets brands such as Whirlpool, KitchenAid, Brastemp, Bauknecht, Consul and several others. It sells to consumers in more than 170 countries.

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