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Home >> Whirlpool Reports Q4 Profits Down 40%
BENTON HARBOR, MICH. – Currency fluctuations, restructuring charges and lower tax credits in Brazil contributed to a 40 percent drop in Whirlpool’s fourth-quarter net earnings, to $122 million.
Net sales for the three months, ended Dec. 31, slipped 2.4 percent, to $4.8 billion.
The nation’s largest majap maker said profits improved considerably on an apples-to-apples basis, and sales rose 2 percent, thanks to higher wholesale prices, a greater mix of high-margin products, productivity improvements, and the benefits of cost-cutting and factory closures.
In North America, those same initiatives led to a 15 percent increase in operating profit, to $233 million, and operating margins of over 9 percent, while sales fell 3 percent to $2 billion during the quarter.
On a conference call, Whirlpool North America president Marc Bitzer attributed the sales decline to the weak economic environment and lean retail inventories, reflecting dealer uncertainty over consumers’ fiscal cliff concerns.
For the full year, net profits rose 2.8 percent to $401 million while net sales slipped 2.8 percent to $18.1 billion.
“Our actions have clearly produced the expected improvement in operating margins, resulting in strong earnings per share and underlying cash flow,” said chairman/ CEO Jeff Fettig. “We successfully improved operating margins through our cost-based price increases, product mix, cost and capacity-reduction initiatives and ongoing productivity programs. Those actions, combined with improving trends in U.S. housing and growth opportunities in emerging markets, create positive momentum going into 2013.”
Indeed, based on the current economic outlook, Whirlpool expects full-year 2013 U.S. industry unit shipments to increase in 2 percent to 3 percent, the first gain in recent years, as the housing market improves and products purchased during the peak demand period of 2002-2005 reach their end of life.
Fettig acknowledged on the conference call that “significant, large, appropriate, cost-based price increases” last year resulted in “marginal” market share losses for the company, but that it has more importantly gained share in higher-margin categories. “We’re not in the business to chase market share based on price,” he said.
Fettig also noted that the industry’s aggressive promotions and record discounting in response to sharp volume declines in 2011 destroyed “tremendous value” at the manufacturing and retailing levels without increasing demand.
“There’s no economic value to doing that; it does not attract demand,” he said. “The focus you will see from us is largely built around letting consumers know about our new products. That’s the way to attract customers in the marketplace in this kind of environment.”
He added that the company’s competitive cost structure, preferred brands and investments in innovative products have left it well-positioned for a recovery in global industry demand.