Appliance maker Whirlpool Corporation announced that first-quarter 2005 net earnings declined to U.S. $86 million, or $1.26 per diluted share, compared to $101 million, or $1.43 per diluted share, in the same period last year. The company says the decline was driven by significantly higher material and oil-related costs.
Net sales of $3.21 billion were a first-quarter record and increased 6.7 percent from last year. Excluding currency translations, net sales increased by approximately 4 percent.
"Our first quarter results reflect the positive benefits from our previously announced price increases, which we initiated to mitigate the significant increases in raw material and oil-related costs," said Jeff M. Fettig, Whirlpool's chairman, president, and CEO.
"The results of pricing actions over the first 3 months of this year, including product and brand mix, were in line with expectations," he continued. "Our operating results were significantly impacted by approximately $190 million in higher material and oil-related costs compared to the prior year's quarter. We were able to mitigate most of this through global price increases, productivity improvements, cost controls and a lower effective tax rate."
Whirlpool North America reported that sales of $1.98 billion increased 4.5 percent from the prior-year period, as price increases ranging from 5 to 10 percent across product lines were implemented. For the quarter, industry shipments for major appliances are estimated to have declined by approximately 2 percent, due primarily to fewer shipping days in the current period and trade inventory reductions. Based on current economic conditions, the company continues to expect full-year industry unit shipments in 2005 to increase approximately 2 percent.
Whirlpool Europe reported sales of $729 million, an increase of 7.3 percent from the prior-year period, representing a record first quarter in units and sales. Excluding currency translations, sales increased approximately 2 percent. Price increases of 3 to 5 percent were implemented across all products and markets during the first quarter. Based on current economic conditions, the company continues to expect full-year industry unit shipments in 2005 to increase approximately 1 percent.
Whirlpool Latin America's sales of $442 million increased 15.9 percent from the prior-year period, driven by price increases and improved product mix, the company said. Price increases on appliances and compressors were implemented during the first quarter. Excluding currency translations, sales increased approximately 8 percent. Industry unit shipments of appliances were up modestly during the quarter. The region is currently implementing its previously announced additional 6-percent price increase to mitigate higher costs.
Whirlpool Latin America expects macro-economic conditions to remain positive and consumer interest rates in Brazil to begin easing during the second half of the year. As a result, the company continues to anticipate a 4-to-5 percent increase in industry unit shipments in 2005.
Whirlpool Asia sales of $94 million advanced 7.6 percent from the prior-year period. Excluding currency translations, sales increased approximately 5 percent. The improvement was driven by strong industry growth, market share gains, regional price increases, and new product introductions. The prior-year quarter also included costs associated with the company's trade management strategy in India. Based on current economic conditions, the company continues to expect full-year industry unit shipments to increase 3 to 5 percent.
Whirlpool said it expects $5.90 to $6.10 for full-year earnings per share in 2005.
"The challenging cost environment we are experiencing is evolving as expected," Mr. Fetting said. "Material and oil-related costs are expected to increase between $500 to $550 million during the current year. We continue to execute global price increases, and are aggressively implementing plans to drive higher levels of controllable productivity, reduce non-product related spending and accelerate the introduction of new products. We will continue to focus on these four priorities in all markets around the world."
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