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Whirlpool Q2 Earnings Off 27%, Sales Flat

7/17/2001 11:46:00 AM Eastern

Benton Harbor, Mich. - Citing a difficult market for the major appliance industry as well as flagging economic conditions worldwide, Whirlpool reported core net earnings, before charges and a one-time loss, of $88 million for the second quarter.

This is about a 27 percent drop from the $121 million recorded in the same three months last year. Net sales of $2.6 billion were the same as the second quarter in 2000, but up 4 percent absent currency translations.

Whirlpool's net sales in North America during the second quarter ended June 30 increased 5 percent, despite a 5 percent drop in U.S. industry unit shipments. However, operating profit in North America, driven by the ongoing competitive environment and increased spending for a significant level of new product introductions, was down 10 percent.

'Given the soft market conditions around the globe, our business in total turned in a solid performance for the quarter,' said David R. Whitwam, chairman, CEO.

Year-to-date core earnings were $162 million - excluding charges and both a one-time loss and gain. This compares to $233 million in the same six months last year, and is about a 31 percent decrease. Net sales year-to-date were $5.10 billion, down 1 percent from the $5.18 billion reported in the same six months in 2000, and up 2 percent absent currency translation.

For the full year, Whirlpool anticipates a 3 percent decrease in industry shipments, compared with 2000. Despite this downward revision, the company expects its record number of new product introductions and productivity gains to drive North American full-year performance to record levels in 2001.

'Based on our current full-year forecast of appliance industry shipments for these [global] markets, and combined with our own execution plans, we anticipate sequential improvement in third- and fourth-quarter core earnings,' said Whitwam. 'We expect to deliver improvement in full-year core earnings per share of 10 percent to 15 percent, which will yield record levels of performance,'

During the second quarter, Whirlpool recorded pre-tax charges of $21 million for restructuring and related activities. Year-to-date, the restructuring effort has resulted in a pre-tax charge of $91 million and is expected to produce savings of about $40 million in 2001, increasing to about $70 million on an annualized basis.

In total, the restructuring effort is expected to result in pre-tax charges of between $300 million to $350 million.