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Whirlpool’s Net Earnings Drop 76% In Fourth Qtr.

2/09/2009 12:56:00 PM Eastern

Benton Harbor, Mich. – Whirlpool reported a 76 percent drop in net earnings for the fourth quarter ended Dec. 31.

Net earnings in the quarter were down to $44 million compared with $187 million in the prior year.

Sales for the quarter were down 19 percent to $4.3 billion compared with the prior year’s $5.3 billion. Excluding the impact of foreign exchange translation, the company's fourth-quarter sales declined about 13 percent.

Fourth-quarter earnings reflect sharply lower global unit sales and production volumes, higher material and oil-related costs and unfavorable foreign currency exchange movements compared to the fourth quarter of 2007.

Whirlpool also recorded $77 million of restructuring costs compared with $15 million in the prior year. Results were also unfavorably impacted by a $32 million product recall expense related to a supplier quality issue.

"The severity and scope of the global economic downturn has significantly increased over the last several months and had a significant impact on consumer demand in all parts of the world," said Jeff Fettig, Whirlpool chairman/CEO. "We have moved very quickly to adjust our business to much lower demand levels by significantly reducing costs and production levels while continuing to focus on providing our trade customers with an ongoing cadence of innovation which represents great value to consumers."

In North America Whirlpool had fourth-quarter sales of $2.5 billion declined 18 percent from the prior year. Excluding the effects of currency, sales declined approximately 16 percent from the prior year. U.S. industry unit shipments of major appliances (T7) declined approximately 10 percent. T7 refers to the following household appliance categories: washers, dryers, refrigerators, freezers, dishwashers, ranges and compactors.

The North America region reported an operating loss of $20 million compared with an operating profit of $175 million in the previous year. Significantly lower sales and unit production levels, unfavorable foreign exchange, product recall costs and higher material and oil-related costs were the primary unfavorable factors affecting the company's fourth-quarter operating profit. These factors were partially offset by favorable price/mix, ongoing cost-reduction initiatives and a $23 million gain related to the sale of an asset.

Based on current economic conditions, the company expects full-year 2009 U.S. industry unit shipments to decline approximately 10 percent from 2008.

For its full year Whirlpool reported annual net sales were down 3 percent to $18.9 billion. Operating earnings were down by almost half to $549 million and net earnings were down about a third to $418 million.

In commenting on the new year’s prospects Fettig said in a prepared statement, "We expect 2009 economic conditions to be among the most challenging that we have faced. Significant demand declines, volatile cost and currency levels are expected throughout the year. To succeed in this environment we are aggressively taking additional steps, beyond actions previously announced, to further reduce all areas of cost, production capacity, working capital and capital expenditures. We will continue to have focused investments in new product innovation to further strengthen our branded market position with our consumers."

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