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Solid gains in its offshore operations helped Whirlpool's second-quarter net sales rise 3 percent to $4.9 billion while net earnings from continuing operations soared 60 percent to $161 million for the three months, ended June 30.
In addition to strong operating profit improvement within each of the company's international business segments, Whirlpool said the results also reflected the benefit from efficiencies associated with last year's acquisition of Maytag, productivity improvements, strong cost controls, favorable currency exchange rates and a lower effective tax rate.
Results were impacted by significantly higher material costs, plus lower shipments within the United States, increased brand investment and a pension curtailment charge.
Each regional business increased year-over-year operating profit margins during the quarter.
"Our international businesses continue to execute extremely well and we are pleased with their financial performance through the first half of 2007," said Jeff Fettig, Whirlpool's chairman/CEO. "While weak industry demand and significantly higher material prices in the United States have unfavorably impacted our results for the past year, we are positive about the trends exiting the second quarter and believe demand will begin returning to moderate growth levels in the second half of this year."
In North America, second-quarter revenue fell 6 percent to $3 billion due to lower OEM shipments and industry demand. Operating profit increased to $179 million despite significant material cost increases, primarily for base metals, component parts and steel. Profits were also squeezed by lower industry demand, increased brand investment in support of new Maytag product launches and a pension curtailment charge. Acquisition efficiencies, cost-based price increases and lower administrative expense mitigated the higher costs.
Whirlpool said industry shipment trends began to improve during the quarter, following six months of high single-digit, year-over-year declines, and that based on current economic conditions, the company continues to expect full-year 2007 U.S. industry unit shipments to decline approximately 2 percent to 3 percent.
For the balance of the year, Whirlpool continues to expect strong performance within its international businesses, while increasing U.S. industry demand, acquisition efficiencies, productivity improvements and Maytag product launches are expected to improve performance within North America during the second half of the year.
"We are addressing current U.S. industry demand trends and heightened global material costs with continued new product innovation, increased productivity throughout our global operations, as well as improving our overall mix of business and realizing implemented cost-based price adjustments," said Fettig. "We now expect to realize efficiencies in excess of $400 million from the Maytag acquisition during 2007 and continue to execute plans to revitalize Maytag's product offering and growth."
Fettig added that due to rising oil prices, the company now expects the combination of material and oil-related costs to increase approximately $570 million for the year.
During the quarter, Maytag completed the launch of the following platforms:
the Centennial series laundry pair, with retro styling, center-knob control and metallic accents, to mark the 100-year anniversary of its first washing machine;
the Bravos high-efficiency, large-capacity top-load laundry pair featuring an impeller wash system with and a commercial-grade stainless-steel wash basket; and
the Epic washer with a built-in dispenser option to automatically dispense OxiClean stain-fighting additive into the pre-wash cycle.
During the quarter,Whirlpool's Jenn-Air brand launched a complete majap collection in an oiled bronze finish.
In addition, KitchenAid launched the Architect Series II, the latest generation of top-of-the-line KitchenAid appliances. Additions to the series include a unique, full-size wall oven with dual fan convection and steam-assist technology; induction cooktops; slow cook warming drawers; built-in refrigerators, including French door configurations; and dishwasher models.