Whirlpool Corporation Reports Second-Quarter Results
BENTON HARBOR, Mich., July 23 /PRNewswire-FirstCall/ -- Whirlpool Corporation (NYSE: WHR) announced today that second-quarter earnings from continuing operations of $117 million decreased 27 percent to $1.53 per diluted share compared to $161 million, or $2.00 per diluted share reported during the previous year's quarter. Revenue of $5.1 billion for the quarter increased 5 percent from the $4.9 billion reported in the second quarter of 2007.
"Whirlpool made solid progress toward improving operating results from first-quarter levels despite an increasingly challenging economic environment," said Jeff M. Fettig, chairman and chief executive officer of Whirlpool Corporation. "The cost inflation facing our business is significant, and we continue to take steps to address this challenge."
Net earnings for the quarter reflected challenging macroeconomic conditions in the company's U.S. business, as industry unit demand declined approximately 8 percent compared to the prior year. Operating profit totaled $203 million compared with $247 million in the prior year. Second-quarter operating results were unfavorably impacted by significantly higher material and oil-related costs, lower U.S. industry unit volume, and an increase in restructuring costs. These unfavorable impacts were partially offset by productivity initiatives and improved results within the company's Latin American operations.
SECOND-QUARTER REGIONAL REVIEW
Whirlpool North America second-quarter sales of $2.9 billion declined 4 percent from the prior year. U.S. industry unit shipments of major appliances (T7)* declined approximately 8 percent.
Operating profit of $101 million declined from $179 million reported in the previous year. Significantly higher material and oil-related costs, lower industry demand and increased selling, general and administrative expense due primarily to increased brand investment were the primary factors affecting the company's second-quarter operating profit. These factors were partially offset by improved productivity and favorable product price/mix.
Based on current economic conditions, the company expects full-year 2008 U.S. industry unit shipments to decline approximately 6 percent to 7 percent from 2007 levels versus the 5 percent to 6 percent decline previously expected.
Whirlpool Europe reported second-quarter sales of $1.1 billion, a 17 percent increase from the prior year. Excluding the effects of currency, sales increased 2 percent in the quarter. Overall industry demand during the quarter declined approximately 2 percent from the prior year.
Operating profit decreased 1 percent to $50 million. Operating profit was unfavorably impacted by higher material and oil-related costs. These increased costs were partially offset by improved product price/mix and productivity improvements during the quarter.
Based on current economic conditions in the European region, the company continues to expect full-year 2008 industry unit shipments to decline 2 percent to 3 percent from 2007 levels.
Whirlpool Latin America net sales increased 22 percent to $1.0 billion. Latin America sales results reflect strong demand for the company's innovative products in the region. Excluding currency translation, sales for appliances and compressors increased approximately 7 percent.
Operating profit totaled $133 million in the second quarter, increasing 40 percent from the prior year. Increased unit shipments, regional tax incentives and strong productivity and cost controls were the main factors behind the year-over-year increase.
Based on current economic conditions in Latin America, the company continues to expect full-year 2008 industry unit shipments to rise 5 percent to 8 percent from 2007 levels.
Whirlpool Asia reported second quarter sales of $178 million, increasing 9 percent from the prior year. Excluding the impact of currency, sales increased approximately 8 percent predominantly due to higher volume in the company's India operations.
The region reported an operating profit of $5 million during the quarter compared with $2 million in the previous year. The year-over-year increase in operating profit resulted from higher volume and favorable trends in productivity and product price/mix. These favorable items were partially offset by higher material costs.
The company continues to expect full-year 2008 industry unit shipments to increase 5 percent to 10 percent from 2007 levels.
"The challenges resulting from significant global commodity inflation have persisted and, in many instances, accelerated," said Fettig. "We continue to execute previously announced cost-based price increases and cost reduction actions related to our global operating platform initiatives. These actions, coupled with other productivity initiatives and bringing innovative new products to the marketplace, are critical to our ability to offset the record commodity and oil-related costs and lower industry demand."
For the full-year 2008, Whirlpool continues to expect earnings per diluted share from continuing operations to be in the $7.00 to $7.50 range and to generate $500 million to $550 million in free cash flow.**
* T7 refers to the following household appliance categories: washers,
dryers, refrigerators, freezers, dishwashers, ranges and compactors.
** A reconciliation of free cash flow, a non-GAAP financial measure, to
cash provided by continuing operations appears below under the heading
"Cash Flow Reconciliation."
The Maytag brand launched:
- Maytag EPIC z front-load washers and dryers in a new slate color.
The pair offers commercial grade components, high-performance and a
space-saving design. The dryer's efficient drying system takes
clothes from wet to dry in less than 30 minutes.
The KitchenAid brand launched:
- The industry's first 30-inch, five-burner gas cooktop. Part of the
new KitchenAid Architect Series II appliance collection, the new
cooktops include both 30- and 36-inch widths, each with five burners.
Full-width cast-iron grates allow easy movement of cookware on the
cooktop without the need to lift items from burner to burner.
- EQ dishwashers that provide optimal cleaning performance, enhanced
drying performance and noise reduction while also saving water and
energy. These exceptionally quiet dishwashers are 57 percent more
efficient than ENERGY STAR® standards, and have an efficiency
designation from the Consortium for Energy Efficiency (CEE), making
them eligible for energy rebates in select regions within the United
- A double-drawer refrigerator/freezer combination within its current
refrigerator drawer collection. The combination refrigerator/freezer
drawer offers convenient access to ingredients, snacks and beverages.
The Jenn-Air brand launched:
- A new line of built-in refrigerators featuring an integrated through-
the-door ice and water dispenser option, a PUR® water filter,
storage bins with Advanced Climate Control technology and an enhanced
temperature management system. The new line features distinct
styling options and offers an overlay design option allowing
consumers to customize the refrigerator to blend with their kitchen
- A wall-mount chimney hood in an oiled bronze finish, which combines
performance and style. The powerful chimney motor allows the hood to
operate efficiently, even with high-output gas burners that are the
staple of discerning cooks.
The Gladiator GarageWorks brand launched:
- 20-inch deep, mesh bottom GearLoft shelves designed to store large
seasonal items like coolers and boxes high on the garage wall,
allowing consumers to better utilize the upper wall space in the
Whirlpool Europe launched:
- Whirlpool brand NoFrost Fresh Control refrigerators designed to
preserve food freshness twice as long. The refrigerators feature
antibacterial protection, active humidity and temperature sensors.
- Whirlpool brand AquaSteam dishwashers, which create steam during the
wash cycle to offer the best cleaning performance, even on delicate
items. The steam feature softens dried-on soil and helps to eliminate
- Whirlpool brand steam-assisted ovens, which produce food that is
beautifully browned on the outside and juicy and tender on the
inside. 6th Sense technology in the oven manages the steam cooking
process by injecting the right amount of steam at the right time.
- Bauknecht Aqua refrigerator-freezer combinations with in-the-door
water dispensing that connects to the main water supply. These
refrigerators comply with the European A+ energy efficiency class and
are ideal for small kitchens.
- KitchenAid brand major appliances in Norway and Finland as part of
the brand's continued European introduction.
Whirlpool Latin America launched:
- Microwave accessories that enable the consumer to customize Brastemp
Maxi microwaves. The accessories include two colorful and creative
options of electrostatic stickers that are easily attached to and
removed from the door of the appliance.
- The Consul Well-Being line of split air conditioners featuring
antibacterial filters and four operating modes: refrigeration,
heating, ventilation and dehumidification.
Whirlpool Asia launched:
- Whirlpool brand Genius refrigerators in India featuring an ice maker
capable of making ice 30 percent faster and a vegetable drawer
designed to keep vegetables fresh for a longer period. The
refrigerator also comes equipped with a jumbo bottle rack,
antibacterial protection and an extra utility drawer for storing
items that do not need to be refrigerated.
- Whirlpool brand Fusion refrigerators in India featuring an emergency
light to provide light equivalent to a 40 watt bulb for two hours
during a power outage, and the ability to retain interior
temperatures for up to 17 hours during the prevalent power outages in
- Whirlpool brand Max microwaves in India offering a compact, rounded
microwave oven with large cooking capacity. The microwaves are
available in six vibrant colors and offer many features including:
crisp (for frying and baking), jet defrost and a child lock.
AWARDS AND ACCOMPLISHMENTS
- Whirlpool Corporation was named one of the Top 50 Most Respected U.S.
Companies by the Reputation Institute.
- Whirlpool Corporation was named one of the World's Most Ethical
Companies by Ethisphere magazine.
- Whirlpool brand was named one of the 10 top greenest brands by U.S.
consumers, according to a recent BrandWeek magazine survey.
- Whirlpool Corporation's third annual Habitat for Humanity® community
build, Whirlpool Building Blocks 2008, was announced in June. This
year's build is in Dallas from November 16 to 21 where nine homes will
be constructed in five days.
- Whirlpool brand kicked off its Mother of Invention 2008 program. The
program encourages moms to submit their innovative ideas for a chance
at a Whirlpool-sponsored business grant. New to the program this year
is a "green" category that will recognize inventions that minimize the
impact on environmental resources.
- In Germany, Bauknecht brand won four Plus X Seals, honoring products in
the categories of Innovation, Design, Ease of Use, Ecology and/or
Ergonomics. The award winning Bauknecht products were the Drawer
Refrigerators, the Microwave-Hood-Combination, Dishwashers with
PowerClean and Washing Machines with SuperEco.
- At the ninth Annual Process Excellence Summit in London, Whirlpool
earned Honorary Mention (second place) in four different categories:
Best Project Contributing to Innovation, Best Fast Track Project, Best
Process Improvement in Manufacturing Project and Best Design for Six
- In the Czech Republic, Whirlpool brand was awarded Reader's Digest
Trusted brand of the year 2008, in the Washer, Dishwasher and Dryer
- KitchenAid brand received a gold award from Appliance DESIGN magazine
as part of its 21st annual "Excellence in Design" competition. The
KitchenAid Architect Series II built-in double oven received the gold
award in the Major Appliances/HVAC category. The advanced convection
oven's steam assist cooking, intuitive user interfaces and visual brand
language were all highlighted as award-winning features.
- The Consul brand was selected as the Top of Mind brand in home
appliances and home electronics in a survey conducted by Amanha
magazine. Previously, the survey recognized the most named
refrigerator brand category, in which Consul was the title holder for
six consecutive years.
- In Argentina, the Whirlpool brand was named Top of Mind by Clarin, the
newspaper with the largest circulation in Spanish in the world.
- Whirlpool Corporation's compressor and cooling solutions business in
Latin America, Embraco, once again received the "Stars of Energy
Efficiency" Award, highlighting the excellence of an Embraco
compressor. The award is given by Alliance to Save Energy, a non-profit
coalition of business, government, environmental and consumer leaders
who promote the efficient and clean use of energy worldwide.
Cash Flow Reconciliation
The table below reconciles actual 2007 and 2008 and projected 2008 cash provided by continuing operations determined in accordance with generally accepted accounting principles (GAAP) in the United States to free cash flow, a non-GAAP measure. Management believes that free cash flow provides shareholders with a relevant measure of liquidity and a useful basis for assessing the company's ability to fund its activities and obligations. There are limitations to using non-GAAP financial measures, including the difficulty associated with comparing companies that use similarly named non-GAAP measures whose calculations may differ from the company's calculations. As defined by the company, free cash flow is cash provided by continuing operations after capital expenditures and proceeds from the sale of assets/businesses. The projections shown here are based upon many estimates and are inherently subject to change based on future decisions made by management and the board of directors of the company, and significant economic, competitive and other uncertainties and contingencies.
About Whirlpool Corporation
Whirlpool Corporation is the world's leading manufacturer and marketer of major home appliances, with annual sales of approximately $19 billion, 73,000 employees, and 72 manufacturing and technology research centers around the world. The company markets Whirlpool, Maytag, KitchenAid, Jenn-Air, Amana, Brastemp, Consul, Bauknecht and other major brand names to consumers in nearly every country around the world. Additional information about the company can be found at http://www.whirlpoolcorp.com.
Whirlpool Additional Information:
This document contains forward-looking statements that speak only as of this date. Whirlpool disclaims any obligation to update these statements. Forward-looking statements in this document include, but are not limited to, statements regarding expected earnings per share, cash flow, productivity and material and oil-related prices. Many risks, contingencies and uncertainties could cause actual results to differ materially from Whirlpool Corporation's forward-looking statements. Among these factors are: (1) intense competition in the home appliance industry reflecting the impact of both new and established global competitors, including Asian and European manufacturers; (2) Whirlpool's ability to continue its relationship with significant trade customers, including Sears Holding Corporation in North America (accounting for approximately 12% of Whirlpool's 2007 consolidated net sales of $19.4 billion) and the ability of these trade customers to maintain or increase market share; (3) changes in economic conditions, including the strength of the U.S. building industry and the level of interest rates; (4) the ability of Whirlpool to achieve its business plans, productivity improvements, cost control, leveraging of its global operating platform, and acceleration of the rate of innovation; (5) fluctuations in the cost of key materials (including steel, oil, plastic, resins, copper and aluminum) and components and the ability of Whirlpool to offset cost increases; (6) the ability of suppliers of critical parts, components and manufacturing equipment to deliver sufficient quantities to Whirlpool in a timely and cost-effective manner; (7) our ability to attract, develop and retain executives and other qualified employees; (8) health care cost trends and regulatory changes that could increase future funding obligations for pension and post retirement benefit plans; (9) the cost of compliance with environmental and health and safety regulations; (10) litigation including product liability and product defect claims; (11) the impact of labor relations; (12) Whirlpool's ability to obtain and protect intellectual property rights; (13) the ability of Whirlpool to manage foreign currency fluctuations; and (14) global, political and/or economic uncertainty and disruptions, especially in Whirlpool's significant geographic regions, including uncertainty and disruptions arising from natural disasters or terrorist attacks. Additional information concerning these and other factors can be found in Whirlpool Corporation's filings with the Securities and Exchange Commission, including the most recent annual report on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K.
both of Whirlpool Corporation