BENTON HARBOR, Mich., July 25, 2006 /PRNewswire-FirstCall via COMTEX News Network/ -- Whirlpool Corporation (NYSE: WHR) today announced that second quarter net sales rose 33 percent to a record $4.7 billion, reflecting the acquisition of Maytag Corporation and strong consumer demand for the company's innovative products around the world. Excluding the company's recent acquisition, net sales increased approximately 5 percent.
Net earnings from continuing operations for the second quarter of 2006 were $100 million, or $1.26 per diluted share, compared to $96 million, or $1.42 per diluted share in the same period last year. Second quarter net earnings include the results and integration costs of the company's recent acquisition of Maytag.
During the second quarter, the company announced its intention to sell the Hoover floor-care, Dixie Narco vending systems, Amana commercial microwave and Jade commercial products appliance businesses. The financial results from these businesses are included in discontinued operations. Total net earnings for the second quarter, including discontinued operations, were $91 million or $1.14 per diluted share.
"We are pleased with our second quarter financial results, as well as the rapid progress made in integrating the Maytag business," said Jeff M. Fettig, Whirlpool's chairman and chief executive officer. "All of our regional businesses delivered higher unit volume, sales and operating profit performance during the quarter. I am particularly pleased with the trade and consumer response to our new product innovations, which have been exceptional. We expect material and oil-related cost increases to continue to accelerate during the second-half of 2006. Accordingly, the company is implementing cost-based price adjustments, productivity initiatives and cost controls to offset the heightened cost environment. Our Maytag integration activities are progressing at an efficient and disciplined pace and remain on-track with previous expectations."
Operating profit results, which reflect strong sales growth and productivity improvements, offset purchase accounting charges, acquisition integration related expenses, higher commodity prices, new product introduction costs and increased restructuring costs.
Fettig added: "Global industry growth for the second quarter was in-line with our expectations and consistent with our prior guidance. As previously communicated, we expect flat-to-moderate industry unit shipment growth during the second half of the year and anticipate global industry growth of 1-to-2 percent in 2007. We continue to successfully introduce a cadence of new product innovation to the marketplace, aggressively invest in our future innovation pipeline, execute plans to drive continuous cost productivity, and implement actions to respond to the current material cost environment. Despite somewhat softer near-term demand, the underlying industry fundamentals remain positive."
During the quarter, cash provided by continuing operations of $81 million improved $190 million compared to last year, primarily due to improvements in working capital. Results also reflect the Maytag brand operations and include $44 million of cash outflow related to acquisition integration costs.
SECOND QUARTER REGION REVIEW
Whirlpool North America operations reported record second quarter unit shipments and revenue. Revenue of $3.3 billion increased approximately 50 percent compared to last year, reflecting the acquisition of Maytag, continued strong consumer preference for the company's innovative product offering and increasing demand for new product innovations. Excluding acquisition effect, sales increased approximately 5 percent. For the quarter, the company's U.S. unit shipments of major appliances (T7)* exceeded industry levels, which were up slightly.
Operating profit of $192 million for the quarter included purchase accounting charges, acquisition integration expenses, planned new product launch costs and higher material prices. The cost increases were mitigated by strong demand and productivity improvements.
Based on current economic conditions, the company expects full-year industry unit shipments in 2006 to increase approximately 1-to-2 percent.
Whirlpool Europe reported record revenue and operating profit during the second quarter. Revenue increased approximately 5 percent from last year's levels to a record $806 million, driven by strong Whirlpool brand performance. Currency translations did not have a material impact on sales. Company unit shipments, reflecting continued strong demand for the region's innovative product line, continued their positive trend during the quarter and exceeded estimated industry demand of 1-to-2 percent.
Strong sales performance, continued improvements in productivity and reductions in administrative costs led to a double-digit improvement in operating profit of 21 percent and a record second quarter operating profit of $45 million. Year-over-year operating profit margins increased from 4.8 percent of sales to 5.6 percent during the period.
Based on current economic conditions, the company continues to expect full-year industry unit shipments in 2006 to increase approximately 1-to-2 percent.
Whirlpool Latin America sales increased 17 percent from the prior-year period to $580 million, driven by strong appliance unit volume. Excluding currency translations, sales increased approximately 13 percent. Industry unit shipments of appliances are estimated to have increased approximately 11 percent during the quarter.
Record operating profit of $55 million, which included the impact of currency, improved 76 percent during the quarter and operating profit margins expanded to 9.4 percent. Productivity improvements and regional incentives more than offset higher material prices and increased brand investment.
Based on the current economic environment in Brazil, the company continues to expect industry shipments in 2006 to increase 8-to-10 percent.
Whirlpool Asia delivered operating profit of $1 million for the second quarter compared to a $4 million loss in the prior year. Sales of $133 million were up 8 percent from last year. Excluding currency translations, sales increased approximately 11 percent. The operating profit improvement reflects improved performance in India, the regions largest market, and reflects the success of new product launches, productivity improvements and a favorable product mix.
Based on current economic conditions, the company continues to expect full-year industry unit shipments to increase 5-to-7 percent.
"We continue to make excellent progress toward the integration of our Maytag business and remain confident in our ability to realize the value creating opportunities of this combination," said Fettig.
Fettig continued: "The year is progressing as previously expected and we are pleased with our first half-year performance. We receive positive feedback from consumers and trade customers every day validating the strength of our product innovation portfolio and continue to accelerate the advancement of innovation as a core competency throughout the company. We have been addressing the heightened material and oil-related cost environment by driving total cost productivity, implementing cost-based price adjustments, controlling spending by reducing overhead and infrastructure while increasing investments in consumer activities and managing our overall mix of business. These actions are driving success in the current economic environment."
"Based on our current assessment, we continue to expect full-year 2006 earnings per diluted share from continuing operations of $6.00 to $6.25 and free cash flow to be in the $200-to-$300 million range. The company also continues to expect 2007 full-year earnings per diluted share to be approximately $9.00," added Fettig.
Cash Flow Reconciliation
The table below reconciles projected 2006 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. Free cash flow does not include potential proceeds from the sale of discontinued 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 more than $19 billion, more than 80,000 employees, and more than 60 manufacturing and technology research centers around the world. The company markets Whirlpool, Maytag, KitchenAid, Jenn-Air, Amana, Brastemp, 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.
* T7 refers to the following household appliance categories: washers,
dryers, refrigerators, freezers, dishwashers, ranges and compactors.
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, expectations regarding the merger with Maytag Corporation. Many risks, contingencies and uncertainties could cause actual results to differ materially from Whirlpool'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, including Asian and European, manufacturers and the strength of trade customers; (2) Whirlpool's ability to continue its strong relationship with Sears Holding Corporation in North America (accounting for approximately 16% of Whirlpool's 2005 consolidated net sales of $14 billion) and other significant trade customers, and the ability of these trade customers to maintain or increase market share; (3) Whirlpool's ability to integrate the recently acquired Maytag Corporation on a timely basis and realize the full anticipated benefits of the merger within the current estimate of costs; (4) demand for Whirlpool's products, including the strength of the U.S. building industry and the level of interest rates; (5) the ability of Whirlpool to achieve its business plans, including productivity improvements, cost control, leveraging of its global operating platform and acceleration of the rate of innovation; (6) fluctuations in the cost of key materials (including steel, oil, plastic, resins, copper and zinc) and components and the ability of Whirlpool to offset cost increases; (7) the ability of suppliers of critical parts, components and manufacturing equipment to deliver sufficient quantities to Whirlpool in a timely and cost-effective manner; (8) changes in market conditions, health care cost trends and pending regulation that could increase future funding obligations for pension and post-retirement benefit plans; (9) the cost of compliance with environmental and health and safety regulation, including new regulations in Europe regarding appliance disposal; (10) potential exposure to product liability claims, including claims that may arise through Whirlpool's regular investigations of potential quality and product safety issues as part of its ongoing effort to provide quality products to consumers; (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 and its effective tax rate; (14) global, political and/or economic uncertainty and disruptions, especially in Whirlpool's significant geographic markets, including uncertainty and disruptions arising from natural disasters; and (15) risks associated with operations outside the U.S. Additional information concerning these and other factors can be found in Whirlpool'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.