Whirlpool Corporation announced fourth-quarter 2004 net earnings of U.S $97 million, compared to $124 million, in the same period last year.
Record net sales for the fourth quarter of $3.63 billion increased 8.1 percent from the previous year's results. Excluding currency translations, net sales increased approximately 5 percent.
"Net earnings per diluted share in the fourth quarter were significantly affected by increases in material and logistics costs, which increased by approximately $150 million above the prior-year quarter," said Jeff M. Fettig, Whirlpool's Chairman, president, and CEO. "This downward pressure on the company's operating margins was mitigated by higher volume, record levels of productivity, price increases, lower incentive compensation expense, and cost controls."
The company's earnings also reflect a reduction in the company's effective tax rate and gain on an equity investment.
For 2004, the company's net sales increased 8.6 percent to a record $13.22 billion. Excluding currency translations, net sales increased approximately 6 percent. Net earnings of $406 million compared to prior-year net earnings of $414 million. Full-year free cash flow was $241 million, after shareholder dividends.
"During the fourth quarter we announced that we were taking specific actions to offset unprecedented levels of material and oil related cost increases. As predicted, these increases accelerated during the quarter, and we estimate that our material cost base will increase an additional 7 to 8 percent during 2005," Mr. Fettig added. "To address this challenging environment, we have implemented global price increases of approximately 5 to 10 percent, effective January 2005, in most key markets around the world. We also have initiated actions to drive record levels of controllable productivity, to leverage our global operating platform and to reduce non-product investment related spending."
Whirlpool's North America operations delivered a record quarter of unit shipments and revenue. Fourth-quarter sales of $2.2 billion increased 5.3 percent from the prior-year period. The company said the results reflect strong industry growth and demand for the its brands and new product introductions.
For the quarter, U.S. industry demand for major appliances increased 10.7 percent versus the prior year. For the full year, industry unit shipments grew 8.3 percent. Based on current economic conditions, the company expects industry shipments in 2005 to increase approximately 2 percent.
Whirlpool Europe reached sales of $895 million, an increase of 12.7 percent from the prior-year period. Excluding currency translations, sales increased approximately 3 percent. The appliance maker said it continued to realize market-share gains in key markets across Europe.
European appliance industry unit shipments were up approximately 1 to 2 percent during the quarter and for the year. Based on current economic conditions, the company expects industry shipments in the region to increase approximately 1 percent during 2005.
Whirlpool Europe has also put price increases of 3 to 5 percent into effect for free-standing and built-in products across all channels, all brands, and most models.
Whirlpool Latin America's sales of $475 million increased 17.8 percent from the prior-year period, driven by price increases and improved product mix. Excluding currency translations, sales increased approximately 14 percent.
Appliance industry shipments in Latin America increased approximately 5 percent during the quarter compared to the prior-year period. For the full year, industry unit shipments grew approximately 17 percent. Economic conditions within Brazil remained strong during the quarter, driven by GDP expansion, lower unemployment, and positive real wage growth. Exports and consumer spending also continued their positive trends, the company said.
Despite the combined benefits of pricing actions implemented throughout 2004 and a continued focus on cost control, fourth-quarter operating profit was significantly impacted by prices for raw materials and higher freight costs associated with product exports from Brazil.
Whirlpool Asia sales declined 9.9 percent from the prior-year period to $104 million. Excluding currency translations, sales declined approximately 12 percent. Operating profit was flat with 2003 results. Weaker demand in China, the conclusion of the trade inventory reduction in India, and higher costs for materials were offset by lower contingent liabilities, productivity improvements, and cost controls, Whirlpool said.
"Looking ahead, we are facing an unprecedented material cost environment during 2005. We have adjusted to this environment by implementing appropriate global price increases, aggressively driving higher levels of controllable productivity, reducing non-product related spending, and accelerating the introduction of new product innovations," Mr. Fettig continued. "These actions, combined with our strong global operating platform, added-value trade distribution, exceptional consumer brands, and innovation capabilities, position us well to succeed during this challenging material cost cycle."
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