Whirlpool Sees Improvements in European Business
Jul 30, 2003
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U.S. home appliance maker Whirlpool Corp. expects to improve its operating profit in Europe and remains committed to Latin America despite weak shipments there, its president said.
Whirlpool last week posted a 49-percent rise in second-quarter profit on strong sales of higher-end KitchenAid and Whirlpool brand appliances. But analysts cited concern about operating margins in Europe, which fell to 3.7 percent from 4.4 percent a year earlier.
Jeff Fettig, Whirlpool president and chief operating officer, said that although Europe, which accounts for 20 percent of company sales, had weak demand and severe price erosion, the company saw growth late in the second quarter.
In Europe, "we still believe we will demonstrate that we are making good operating profit improvement this year, and I expect to see that in the third quarter," Mr. Fettig told Reuters. "The results of both our productivity and restructuring actions will be much heavier in the second half."
He said Whirlpool this week was raising prices in the UK, Poland, and other European countries where the company had taken a hit from exchange rate movements.
Additionally, he said market conditions in Latin America, which accounts for 12 percent of Whirlpool sales, likely hit bottom in the second quarter. Shipments were off 22 percent in Brazil, where high interest rates and restrictions on credit have stemmed demand.
Mr. Fettig said Whirlpool expects business in Latin America to be down in the third quarter, but not as much as the second quarter.
"Given our strength there, we believe the market will come back and we're going to be in a really good position as it begins to come back," he said.
He cited rising demand for higher-end products among consumers looking to replace old appliances and those buying new homes. For instance, he said, the company's Duet front-loading washer-dryer pair, which uses less energy and retails for more than U.S. $2,000, was being purchased across every income spectrum.
"We've not seen that there has been a huge shift to lower-priced products," Mr. Fettig said. "The biggest growth we've seen in the business has been the mid- to upper end of the marketplace where there has been innovation." (Reuters)
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