Whirlpool Corporation (Benton Harbor, MI, U.S.) announced third-quarter 2004 net earnings of U.S. $101 million, or $1.50 per diluted share, compared to $105 million, or $1.48 per diluted share, in the same period last year. Third-quarter net sales of $3.32 billion increased 6.6 percent from the same period last year. Excluding currency translations, net sales increased approximately 4 percent.
"During the third quarter we had record sales on continued strong consumer demand for our brands around the world. Market growth remained positive, although growth rates declined moderately from first-half levels," said Jeff Fettig, Whirlpool's chairman, president, and CEO.
Year-to-date sales of $9.59 billion increased 8.7 percent compared to the prior-year period. Excluding currency translations, year-to-date sales increased approximately 6 percent. Year-to-date net earnings of $4.46 per diluted share increased 7.7 percent from the prior-year period.
"Our quarterly operating results were negatively impacted by raw material cost increases and record high oil prices," Mr. Fettig said. "The magnitude of these cost increases could not be offset by our record level of productivity and overall business spending controls. Additionally, material and component supply shortages impacted our sales."
Mr. Fettig said that Whirlpool believes its actions will enable it to overcome the significant cost increases, but that the full effect of these benefits will not be realized until 2005. As a result, appliance maker now expects full-year earnings per share to be in the range of $5.85 to $5.95, versus previous guidance of $6.20 to $6.35.
Whirlpool reported the following third-quarter highlights:
Net sales and unit shipments were record third-quarter performances for the company.
Free cash flow improved $50 million on a year-over-year basis.
Global Finance magazine recently selected Whirlpool as the "Best Company in the World" in the consumer durable sector. The recognition is part of the annual Global Finance survey of top regional and global companies in 28 industries.
Whirlpool received the prestigious 2004 American Society for Training and Development "Best Award." The Best Award recognizes organizations that continually support organization-wide learning to improve business results.
Whirlpool received the "User-Centered Design Award" by the Human Factors & Ergonomics Society. The award recognized the Whirlpool(R) Duet(R) fabric care system for its consumer appeal, ease of use, as well as the company's innovative product development process.
Habitat for Humanity International recognized Whirlpool for surpassing the 50,000 milestone in appliance donations to families in need. Whirlpool donates a refrigerator and range to every Habitat home built in North America and Europe.
Third-Quarter Region Review
Whirlpool North America's sales of $2.1 billion increased 1.8 percent from 2003. The operation delivered third-quarter records in sales, unit shipments, and manufacturing productivity.
To help offset the ongoing high levels of material and logistics costs, Whirlpool North America expects to continue to improve productivity, implement its recently announced price increase, and accelerate the pace of new product launches across all brands throughout 2005.
U.S. industry unit shipments of major appliances increased 5.4 percent from the prior-year period. Full-year industry shipments are expected to increase by approximately 8 percent.
Whirlpool Europe's sales of $783 million increased 11.2 percent from the prior-year period. Excluding currency translations, sales increased approximately 2 percent. Whirlpool Europe delivered a strong operating performance for the quarter, including record third-quarter sales, strong productivity and cash flow, and improved brand and product mix. Appliance industry unit shipments were up approximately 1- to 2-percent from the prior-year period. Based on current economic conditions, the company now expects full-year industry shipments to grow approximately 1- to 2-percent from last year's level.
Whirlpool Latin America's sales of $426 million increased 32 percent from the prior-year period. Excluding currency translations, the sales increase was essentially the same. Consumer demand improved as the Brazilian economy showed continuing signs of strength. Regional unit shipments increased significantly, as did exports to the company's global distribution network.
Shipments of the Consul(R) Ideale(TM) clothes washer -- a new product targeting an untapped market of first-time buyers -- contributed to improved revenue and market share in the quarter. The Ideale(TM) washer is an example of the company's strategic use of innovation to extend its brands to new and emerging markets. Appliance industry unit shipments in Brazil increased approximately 26 percent from the prior-year period. Based on current economic conditions, the company expects full-year industry unit shipments to increase approximately 15- to 18-percent from last year's level.
Whirlpool Asia's sales of $81 million declined 11.7 percent from the prior-year period in a mixed market environment within the region. Excluding currency translations, sales declined approximately 14 percent. Based on current economic conditions, the company expects full-year industry unit shipments to increase approximately 5 percent from last year's level.
"In the current environment, our business is being challenged by significant increases in material and logistics costs, as well as shortages of key materials and components. We have adjusted to this environment by aggressively driving higher levels of productivity, by implementing appropriate price increases and by accelerating the rate of new product innovation to the market," Mr Fettig said. "Our global operating platform, strong consumer brands and innovation capabilities provide us with the necessary tools to overcome these challenges and will enable us to deliver a solid year of operating results in 2004 and position us well going into 2005."
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