Whirlpool Reports Strong Q1 Sales and Earnings
Apr 22, 2004
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Whirlpool Corporation announced first-quarter 2004 net earnings of U.S. $101 million, or $1.43 per diluted share, compared to $91 million, or $1.32 per diluted share, in the same period last year. First-quarter net sales of $3 billion increased 10.7 percent from the same period last year. Excluding currency translations, net sales increased approximately 5 percent.
"The company's solid results were driven by the strong performance of our North American and European operations," said David R. Whitwam, Whirlpool chairman and CEO. "Record sales, unit shipments, and significant profit improvement from these two regions underscore the strength and momentum of our global business. These results were tempered by rising raw material costs worldwide, as well as the negative effects of currency in Latin America."
First-quarter highlights for the company included the following:
Net earnings of $1.43 per diluted share increased 8.3 percent from the prior-year period.
Sales and unit shipments were first-quarter records for the company.
Free cash flow improved $104 million compared to the prior-year period. Free cash flow is cash from operations after proceeds from the sale of fixed assets, dividends and capital expenditures.
The effects of currency reduced earnings by approximately $0.20 per share, with the largest impact in Latin America.
The company announced plans to build a new built-in cooking appliance production platform at its facility in Wroclaw, Poland, with initial production volume anticipated for 2005. Whirlpool's Wroclaw facility is part of the company's global manufacturing network that produces a wide range of branded appliances in cost-competitive locations for regional and global markets.
First-Quarter Region Review
Whirlpool North America's sales of $1.89 billion increased 5.4 percent from the prior-year period, the company reported, adding that U.S. industry demand was strong during the quarter. Within this environment, sales, unit shipments, operating profit, and cash flow were first-quarter records for the operation, Whirlpool said. Operating profit increased 17.7 percent, driven in part by effective brand and product mix management, as well as productivity gains. The improvement was also reflected in double-digit revenue increases in Whirlpool brand and KitchenAid brand products, as well as the company's home-builder business.
U.S. industry unit shipments of major appliances -- which include washers, dryers, refrigerators, freezers, dishwashers, ranges, and compactors -- increased 7.6 percent from the prior-year period. Based on current economic conditions, the company now expects full-year U.S. industry shipments to increase 4 percent from last year's level.
Whirlpool Europe's sales of $680 million increased 20.5 percent from the prior-year period. Excluding currency translations, sales increased approximately 5 percent. Continued consumer demand for Whirlpool innovation and the company's continued emphasis on product and brand mix management helped drive a 51-percent increase in operating profit, Whirlpool said. Growth of the company's built-in appliance business, expansion of the Whirlpool brand, as well as significant cost savings from productivity gains contributed to the profit improvement as well, the company reported.
First-quarter industry unit shipments for Whirlpool Europe increased 3 percent from the prior-year period. Based on current economic conditions, the company expects full-year industry shipments to increase approximately 3 percent.
Whirlpool Latin America's sales of $382 million increased 24.7 percent from the prior-year period. Excluding currency translations, sales increased approximately 11 percent. Operating profit declined 18 percent due entirely to the negative effects of currency on exports. Absent the effects of currency, operating profit would have increased by approximately 50 percent, the appliance maker said. Beginning in the second quarter, the company anticipates a return to more favorable currency comparisons on a year-over-year basis. Whirlpool also expects that the Brazilian economic environment will gradually improve as interest rates continue to decline.
First-quarter industry unit shipments in Brazil increased approximately 16 percent from the prior-year period. Based on current economic conditions, the company now expects full-year industry unit shipments to increase approximately 8 to 12 percent from last year's level.
Whirlpool Asia's sales of $88 million declined 5.1 percent from the prior-year period. Excluding currency translations, sales declined approximately 11 percent. During the quarter, the company adopted a new trade management strategy, which included new trade terms, and increased its operating reserves primarily for higher levels of bad debt. These actions resulted in an operating loss. The company expects to complete and begin realizing improved profit performance from the new trade strategy starting in the second quarter.
Based on current economic conditions, the company continues to expect full-year industry shipments to increase by 5 to 8 percent.
"Our operations will continue the rapid rate of new innovation introductions to customers worldwide as we continue to fully leverage our global operating platform," Mr. Whitwam said. "We also expect to drive improved results through effective brand and product mix management and increasingly higher levels of productivity."
For the remainder of 2004, Mr. Whitwam said that U.S. industry demand should be "moderately better" than Whirlpool's previous forecast. "Pressures from raw material costs and the Brazilian economy will continue, though we expect to see some improvement in both areas as the year progresses," he said. "Based on these factors and our current view of market conditions worldwide, we continue to anticipate full-year earnings for 2004 in the range of $6.20 to $6.35 per share."
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