Whirlpool Profit Dips 15 Percent
BENTON HARBOR — Whirlpool Corp. today announced that significantly higher materials and oil-related costs had driven its first quarter profits down 15 percent to $86 million, a $15 million drop from the same period in 2004.
Meanwhile, net sales of $3.21 billion were a first quarter record for the world's leading appliance manufacturer and marketer, up 6.7 percent from last year.
"Our first quarter results reflect the positive benefits from our previously announced price increases, which we initiated to mitigate the significant increases in raw material and oil-related costs," said Jeff Fettig, Whirlpool's chairman, president and chief executive officer. "The results of pricing actions over the first three months of this year, including product and brand mix, were in line with expectations"
Operating results were significantly impacted by approximately $190 million in higher materials and oil-related costs compared to the prior year's quarter, Fettig said, although the company did mitigate most of that through global price increases, productivity improvements, cost controls and a lower effective tax rate.
By division, Whirlpool North America operations delivered record first quarter revenue with sales of $1.98 billion, an increase of 4.5 percent from the prior-year period.
Operating results declined 14 percent to $182 million year-over-year. The company continues to expect full-year industry unit shipments in 2005 to increase approximately 2 percent.
Whirlpool Europe sales of $729 million increased 7.3 percent from the prior-year period, also a record first quarter in units and sales. Whirlpool Latin America's sales of $442 million increased 15.9 percent from the prior-year period, driven by price increases and improved product mix. Despite the challenging cost environment, operating profit advanced 12.9 percent to $25 million. The region is currently implementing its previously announced additional 6-percent price increase.
Whirlpool Asia sales of $94 million advanced 7.6 percent from the prior-year period. Operating profit improved 44 percent over last year's levels, led by improvement in India and China.
"The challenging cost environment we are experiencing is evolving as expected," said Fettig. "Material and oil-related costs are expected to increase between $500 (million) to $550 million during the current year. We continue to execute global price increases, and are aggressively implementing plans to drive higher levels of controllable productivity, reduce non-product related spending and accelerate the introduction of new products. We will continue to focus on these four priorities in all markets around the world."
Based on the assessment of the current environment, Fettig expects full-year earnings-per-share of $5.90 to $6.10, and free cash flow to be in the range of $250 million to $300 million.
In March and April, Whirlpool was recognized with several honors.
The U.S. Environmental Protection Agency (EPA) and the Department of Energy (DOE) named Whirlpool an Energy Star Partner of the Year for the sixth time. An Energy Start partner since 1998, the award recognizes the company's leadership in manufacturing and promoting appliances that earn the Energy Star rating, the government-backed symbol of energy efficiency.
Whirlpool also was named one of the top 100 employers by Black Collegian Magazine for the second time and was named to the Business Ethics Magazine 100 Best Corporate Citizens for the sixth consecutive year.
Whirlpool also was honored with two Partners in Progress achievement awards from Sears Holding Corp.