Whirlpool Q3 Profits Up 124%; Will Lay Off 5,000
By Alan Wolf On Nov 7 2011 - 5:01am
BENTON HARBOR, MICH. –
Price hikes, cost reductions
and a richer mix of higher-margin majaps helped propel
Whirlpool’s third-quarter profits 124 percent, to $177 million.
But forecasting weaker-than-expected demand and a
“much more challenging environment,” the world’s largest
majap maker said it plans to cut 10 percent of its North
American and European workforce by next year, resulting
in the loss of 5,000 jobs.
The consolidation includes the closure of a refrigerator
plant in Fort Smith, Ark., the cutting of 1,200 salaried positions,
and a capacity reduction of about 6 million units
annually across both continents. The Fort Smith factory
will close by mid-2012 and production will be moved to
other North American facilities.
Whirlpool said the actions will cost about $500 million, but
will save the company $400 million a year beginning in 2013.
“We are taking necessary actions to address a much more
challenging global economic environment,” said Whirlpool
chairman/CEO Jeff Fettig.
“We are beginning to see the
benefits from previously announced price increases. However,
our results were negatively impacted by recessionary
demand levels in developed countries, a slowdown in emerging
markets and high levels of inflation in material costs.”
During the third quarter, ended Sept. 30, net sales
rose 2.2 percent to $4.6 billion, driven largely by favorable
currency fluctuations. Third-quarter operating
profit fell nearly 42 percent, to $136 million, as weaker
global demand and higher raw material and oil-related
costs offset the benefits of ongoing productivity, cost
reduction initiatives and previously announced price
increases, the company said.
In North America, sales slipped 2 percent to $2.4
billion as unit shipments decreased 3 percent, compared
with a 4 percent decline in shipments industrywide
during the period. North American operating
profit fell 45.6 percent as a series of price hikes and an
improved product mix were offset by lower unit sales,
higher material costs and reduced production.
Looking ahead, Whirlpool is projecting a 3 percent
to 5 percent decline in full-year U.S. industry shipments