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Whirlpool Q3 Profits Up 124%; Will Lay Off 5,000

10/28/2011 08:42:47 AM Eastern
Benton Harbor, Mich. - Price hikes 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 believe our cost and capacity reduction initiatives, recently announced cost-based price increases and innovative product launches will enable us to expand operating margins and deliver long-term value to shareholders."

 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 in 2011.

U.S. product launches during the quarter included:

a Whirlpool-brand resource- efficient dishwasher that uses 40 targeted spray jets to scour away baked-on foods and deliver twice the coverage to clean without pre-rinsing, saving consumers up to 20 gallons of water per load;

a Whirlpool-brand counter-depth, full-capacity side-by-side refrigerator that monitors and adjusts temperatures to help food stay flavorful;

Maytag's Bravos XL top-load high-efficiency washer that offers the best cleaning while using up to 76 percent less water and 78 percent less energy compared to pre-2004 traditional top-load washers;

a KitchenAid sequential dual evaporator side-by-side refrigerator that keeps food "fresher longer and better than any other brand," Whirlpool claimed;

the Jenn-Air brand's Prostyle undercounter refrigerator with adjustable shelves for maximum storage flexibility, and a fixed spill-proof glass shelf; and

an Amana top-freezer refrigerator with a door bin that keeps drinks secure and easy to reach in the door.

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