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Whirlpool Reports Record Results, Record Product Rollout Feb 2, 2006 |
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Whirlpool Corporation today announced record fourth-quarter 2005 net earnings of U.S. $126 million, or $1.83 per diluted share, compared to $97 million, or $1.44 per diluted share, in the same period last year. The appliance company, based in Benton Harbor, Michigan, U.S., also reported record full-year 2005 net earnings of $422 million, or $6.19 per diluted share, compared to $406 million, or $5.90 per diluted share last year.
Fourth-quarter net sales increased 9 percent from the prior-year period to $4 billion. Excluding currency translations, net sales increased by approximately 8 percent. For the full year, net sales increased $1.1 billion, or 8 percent to $14.3 billion. Excluding currency translations, net sales increased approximately 6 percent. Both fourth quarter and annual net sales represented records for the company.
“Overall, 2005 was a challenging operating environment where we faced all-time high levels of material and oil-related costs. Our global business responded well to this environment and enabled us to deliver a record year of results for our shareholders,” said Whirlpool Chairman and CEO Jeff M. Fettig. “These results were driven by very positive consumer demand for our new product innovations, strong sales performance, disciplined cost controls and overall outstanding execution by our people around the world.
“We are pleased with our 2005 financial performance, as well as the significant progress made to strengthen our company’s competitiveness for the future,” added Fettig. “Our business is well positioned entering 2006 as we will launch the largest number of new products-to-market in the company’s history. Our innovation pipeline continues to grow, consumer and trade response has been strong, and we continue to execute our strategy of delivering consumer-relevant innovation to our customers worldwide.”
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Whirlpool's Outlook
“We are entering 2006 with strong business momentum, a proven global strategy, a cadence of new product innovation and a strong balance sheet. We expect our positive earnings momentum to continue during 2006, and our organization is well prepared for the challenges and opportunities we expect to see in the current year,” said Fettig. “New product introductions, productivity improvements and strong cost controls are expected to more than offset continued increases in the material and oil-related cost environment.
“Given this environment, we are projecting our 2006 full year earnings-per-share to be in the $7.00-to-$7.25 per diluted share range without taking into account any effects of the proposed merger with Maytag.”
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Biggest Product Rollout Ever
Whirlpool announced the company’s largest number of new product launches ever with the 2006 rollout of several new appliances.
The Whirlpool brand’s new Cabrio(TM) combination washer-and-dryer design offers a 4.5-cubic-foot capacity in a top-load design. The combination laundry appliance is designed to handle the equivalent of three laundry baskets in a single load and is said to significantly reduce dry time through a combination of the washer’s ultra-fast spin speed and the dryer’s AccelerCare(TM) system. The Cabrio saves more than half the energy and water used by conventional top-load washers, according to Whirlpool. The system will be available in July 2006.
Whirlpool brand Duet Sport(TM) and Duet Sport(TM) HT (pictured) models are smaller versions of the popular Duet(R) front-load pair, with a six-point suspension to reduce vibration and noise. Like the Duet pair, they use less than half the water and energy of conventional top-loaders, according to Whirlpool. The Duet Sport(TM) model will be available in March 2006 and the Duet Sport(TM) HT model, with a super-capacity washer drum and high-temperature “sanitary cycle,” will be available in May 2006.
Whirlpool brand “classic” top-load washer and dryer have been redesigned with new technology intended to simplify cycle selections and ensure optimal wash temperature, and with built-in sensors to monitor wash water. The dryer’s AccelerCare(TM) system is said to dry clothes as fast as the washer cleans them. The “classic” pair will be available in May 2006.
Whirlpool brand also launched the Whirlpool Gold(R) Velos(TM) SpeedCook oven. The oven delivers four ways to cook in a single appliance, intending to combine the capacity and performance of an oven with the speed of a microwave.
KitchenAid brand launched the Dual Fuel Convection Range with Steam-Assist, providing steam during cooking to help cook a range of foods.
Whirlpool Europe launched the Blue Touch front-loading washing machine, with a new full-height control panel with a central push button control area and LCD technology, design to provide full feedback. The Blue Touch model was named the United Kingdom’s "Fabric Care Product of the Year 2006 by Get Connected Magazine.
Recent Whirlpool Successes
The Whirlpool(R) Fabric Freshener, an appliance designed to relax wrinkles and removes odors from fabrics in about 30 minutes, received a Good Buy award from consumer magazine Good Housekeeping.
Whirlpool Latin America was listed in the Carta Capital Magazine ranking of “The most admired (companies) in Brazil 2005” in the home appliances segment.
KitchenAid brand was ranked “Highest in Customer Satisfaction with Dishwashers and Ranges, Cooktops and Ovens” by J.D. Power and Associates 2005 Major Home Appliances Study.
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Fourth-Quarter Regional Review
Whirlpool North America delivered record fourth-quarter and total year unit shipments and revenue. Fourth-quarter revenue of $2.4 billion increased 12 percent from the prior-year period led by strong demand for the company’s branded products. Industry shipments of major appliances were up approximately 5 percent during the fourth quarter. For the year, the company’s unit shipments of major appliances approximated industry shipments, which grew by 2 percent.
Operating profit of $226 million improved 36 percent during the quarter and operating margins improved 1.6 points to 9.2 percent. Higher material and oil-related costs were offset by the combination of cost-based price adjustments, controllable productivity improvements and reductions in general and administrative expenses.
Based on current economic conditions, the company expects 2006 industry shipments to increase approximately 2-to-3 percent.
Whirlpool Europe’s fourth-quarter revenue of $849 million declined 5 percent from the prior-year period. In local currency, sales increased approximately 2 percent. Annual revenue increased to a record $3.2 billion.
Year-over-year unit shipments exceeded industry demand during the quarter, primarily due to strong Whirlpool brand performance and continued growth in the company’s built-in business. Overall industry volume is estimated to have been flat-to-down 1 percent during the quarter. For the year, industry volume is estimated to have declined between 1-to-2 percent.
Operating profit of $46 million declined 12 percent for the quarter. Excluding the impact of currency, operating profit declined approximately 2 percent from the prior-year period. Results were positively impacted by higher volumes, productivity improvements and a $12 million gain on an asset sale, and negatively impacted by higher incentive compensation and unfavorable currency.
Based on current economic conditions, the company expects 2006 industry unit shipments to increase approximately 1-to-2 percent.
Whirlpool Latin America’s sales of $580 million increased 22 percent from the prior-year period. Excluding currency translations, sales increased approximately 8 percent. Appliance industry unit shipments are estimated to have increased 1 percent during the quarter and 2 percent for the year.
Operating profit of $56 million improved significantly during the quarter. Fourth quarter results included $23 million of regional incentives. Excluding the incentives, operating profit more than tripled, as cost-based price adjustments and significant cost reductions more than offset higher incentive compensation.
Based on the current consumer interest-rate environment and macro-economic conditions in Brazil, the company anticipates industry unit shipments to increase 6-to-8 percent during 2006.
Whirlpool Asia’s fourth-quarter sales increased 6 percent from last year’s results, primarily from new product introductions and an improved product mix. Currency did not have a material impact on sales during the quarter. Operating profit improved significantly within India, the region’s largest market during the quarter, reflecting the success of new product introductions, cost controls and an improved product mix. Overall, regional operating profit declined during the quarter, primarily due to a favorable contingent liability adjustment included in the prior year and higher material costs across the region. For the year, operating profit improved 10 percent.
Based on current economic conditions, full-year 2006 industry unit shipments are expected to increase 5-to-7 percent.
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Maytag Merger
On December 22, 2005, Maytag shareholders approved the proposed merger with Whirlpool. Completion of the proposed merger remains subject to regulatory clearance. To facilitate the review by the Antitrust Division of the Department of Justice of the proposed merger, Whirlpool and Maytag agreed not to close the deal before February 27, 2006, without getting the Antitrust Division’s OK – and the Antitrust Division may request additional time for the review.
Whirlpool and Maytag say they are working closely with the Department of Justice.
Fettig said today that he still expects to close on the Maytag merger in the first quarter of 2006. "We believe that the combination will create substantial benefits for consumers, trade customers and our shareholders,” he said. “This transaction will translate into better products, quality and service, as well as other efficiencies that will allow us to offer a more competitive, wider range of products to a much broader consumer base.”
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