Whirlpool Cost Cutting Helps 3Q Results
Oct 29, 2010
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Whirlpool's third-quarter net earnings were $79 million, down from $87 million in the same period in 2009. Sales were $4.5 billion, up 0.5% from 3Q of 2009.

Third-quarter operating profit was $234 million compared with $189 million in 3Q 2009. The increase was credited to cost reduction and productivity initiatives as well as increased monetization of some tax credits, but these were offset by higher material costs and lower product price/mix.

Whirlpool Corp. chairman and CEO Jeff M. Fettig said the challenging environment of the third quarter, which resulted in a significant slowdown in appliance sales, was not unexpected.

NORTH AMERICA: Unit shipments were up 1% in North America but 3Q sales of $2.4 billion were down 3% from the prior year. U.S. industry unit shipments of major appliances (washers, dryers, refrigerators, freezers, dishwashers, ranges, and compactors) decreased 3% in the third quarter.

Third-quarter 2010 adjusted operating profit for the North America region was $114 million, down from $147 million in the prior year, hurt by lower product price/mix and higher material costs. These factors were partially offset by favorable cost reduction and productivity initiatives.

Whirlpool said it now expects full-year 2010 U.S. industry unit shipments to increase about 3% - down from its previous expectation of a 5% increase.

EUROPE: Whirlpool Europe sales were down 8%, to  $827 million, from the prior year. The company said that excluding currency effects sales were approximately equal to the prior year. Overall industry unit demand during the quarter was up 3-4% over 3Q 2010.

The European business reported a 3Q operating profit of $26 million, up from $14 million in the previous year. The improvement came primarily from successful cost reduction and productivity initiatives, but was partially offset by lower price/mix and higher material costs.

Whirlpool expects full-year 2010 industry growth in Europe to be in the 1-3% range compared to the prior expectation of flat demand.

LATIN AMERICA: Whirlpool Latin America 3Q net sales were $1.1 billion, up 13% from 3Q 2009. Excluding currency translation, sales increased about 9%.

Operating profit was $143 million, up form $93 million 3Q 2009. The improvement was primarily related to increased monetization of tax credits, cost reductions, and productivity initiatives. These factors were partially offset by higher material costs and lower price/mix.

Whirlpool still expects full-year 2010 Brazilian appliance shipments to increase approximately 10%.

ASIA: Whirlpool Asia 3Q sales were $195 million, up 21% 3Q 2009. Excluding currency effects, sales increased 16%. Adjusted operating profits were $5 million in the quarter, approximately equal to 3Q 2009. Favorable unit volume levels were offset by higher material and oil-related costs.

Whirlpool now expects full-year 2010 industry unit shipments in Asia to be up 8-10%; its previous expectation was for a 5-8% increase.

OUTLOOK: For the full-year 2010, Whirlpool expects reported earnings per diluted share between $7.80 and $8.30.

As reported by ApplianceMagazine.com on Oct. 4, Whirlpool was forced to record an expense of $91.8 million, or approximately $1.20 per diluted share, during the third quarter of 2010.  This came about when Embraco North America, Inc., from Whirlpool's compressor business headquartered in Brazil, struck a plea agreement relating to the U.S. government's antitrust investigation of the compressor industry. Embraco agreed to pay $91.8 million in six annual installments, with the first payment expected to be made in the fourth quarter of fiscal 2010.

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