Whirlpool N.A. Sales Increase 1.8%, Profit Slides

By Jeff Malester -- TWICE, 10/25/2004

Benton Harbor, Mich. — Third-quarter records — set in North American sales, unit shipments and manufacturing productivity — highlighted results at major appliances maker Whirlpool, with the company reporting a 1.8 percent North American sales increase to $2.1 billion for the period, year-over-year.

Majap operating results in the third quarter in North America benefited from improved brand and product mix, strong expense leverage and higher average sales values based on the success of the company's “product innovation” in the market, said Whirlpool.

Despite these improvements, the company said significantly higher material (steel) and logistics costs, coupled with shipping delays triggered by select materials shortages, drove operating profit below the prior-year period.

In contrast, industry shipments of majaps increased 5.4 percent in the third quarter, ended September 30, according to Whirlpool.

To balance its sales results in this negative environment, Whirlpool said it would increase prices by 5 percent to 10 percent in most key markets, including the United States. It also expects to drive higher levels of productivity in all business operations and accelerate the rate of product innovation.

“In the current environment, our business is being challenged by significant increases in material and logistics costs, as well as shortages of key materials and components,” said Jeff Fettig, Whirlpool's chairman/CEO. “We believe our actions in total will enable us to overcome these significant cost increases, but the full effect of these benefits will not be realized until 2005.”

Citing a moderate decline in overall market growth rates from the first half, Whirlpool reported a 6.6 increase in consolidated third-quarter sales, to $3.3 billion from $3.1 billion in the same three months in 2003. Excluding currency translations, net sales increased about 4 percent. Net earnings dropped to $101 million from $105 million.

Consolidated sales for the nine months rose 8.7 percent, reaching $9.6 billion from $8.8 billion in the same period a year ago. Excluding currency translations, year-to-date sales increased about 6 percent. Net earnings moved up to $309 million from $290 million in the same time frame a year ago.

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