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Whirlpool, Electrolux Look To Recovering U.S. Market

5/05/2013 08:00:00 PM Eastern

NEW YORK — Whirlpool and Electrolux reported mixed results for the first quarter, with the former posting higher earnings but flat sales and the latter losing ground in both.

But both manufacturers pointed to a rebounding U.S. majap market, which they expect will grow between 2 percent and 5 percent this year in unit volume, as a bright spot in an otherwise pressured global industry.

Whirlpool, the world’s largest majap maker by revenue, said GAAP net earnings were $252 million, compared with net earnings of $92 million share reported during the same period last year, which were driven by continued favorable product price and mix and the benefit of cost- and capacity-reduction initiatives, the company said.

Sales in the quarter were $4.2 billion, compared with $4.3 billion reported during the same period last year. Excluding the impact of both foreign currency and Brazilian (BEFIEX) tax credits, sales were flat to the prior year.

“The first-quarter results were in line with our expectations and continue to reflect our actions to expand margins, marking the fifth consecutive quarter of year-over- year operating margin improvement,” said Jeff Fettig, chairman and CEO of Whirlpool.

“We expect to see moderately higher revenue growth, due to continued strength in U.S. housing and improving demand trends internationally, and we are on track to deliver our operating profit margin, earnings and free cash flow guidance for the year,” Fettig commented in a statement.

First-quarter GAAP operating profit totaled $254 million, compared with $204 million in the prior year. Continued positive product price and mix and the benefit of cost and capacity-reduction initiatives positively impacted results during the quarter, Whirlpool said.

For Whirlpool, North America first-quarter sales were $2.2 billion, essentially flat from the previous year. The North American region reported operating profit of $218 million, or 9.7 percent of sales, compared to $151 million in the prior year, or 6.7 percent of sales.

The company continues to expect full-year 2013 U.S. industry unit shipments to increase in the range of 2 to 3 percent.

Meanwhile, Electrolux said unfavorable exchange rates and weakness in Europe offset sizzling first-quarter results in North America.

Net profits fell 28 percent to 361 million Swedish kronor (SEK) for the three months, ended March 31, while net sales slipped 2.1 percent to 25.3 billion SEK.

Operating income increased 15 percent excluding the 318 million SEK impact of currency fluctuations.

In a statement, president/CEO Keith McLoughlin said Europe will continue to be a drag on business this year due to the “negative macro environment resulting in falling demand of domestic and professional appliances.”

In contrast, sales in North America rose 8 percent to 7.7 billion SEK and operating income climbed 249 percent to 457 million SEK due to volume growth and a greater mix of pricier, high-margin products. The company said it continued to capitalize on the majap momentum by increasing its marketing spend to support the Electrolux and Frigidaire brands.

McLoughlin, who previously headed the North America unit, described the majap market here as “gradually improving … We are seeing evidence that the recovery in the housing market is finally generating increased consumption of appliances,” prompting a company forecast of 3 percent to 5 percent growth this year industrywide.

He added that following an extended period of trading down to less-expensive products, consumers are now purchasing more high-end models, yielding a higher-margin mix.

“Combined with a strong product offering in all price segments and access to all of the important distribution channels, we remain confident that we can improve our market position in North America in 2013,” McLoughlin said.

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