Benton Harbor, Mich. - A combination of special charges, higher oil and raw materials costs, and increased demand for low-margin products led Whirlpool to a net loss of $161 million for its second quarter, ended June 30.
Sales rose 4 percent to $4.7 billion due largely to favorable currency fluctuations.
Whirlpool chairman/CEO Jeff Fettig said continued cost reduction and productivity initiatives, coupled with strong product innovation, helped mitigate "a volatile demand environment and record levels of material cost inflation."
The second-quarter charges included the settlement of a two-decades-long collection dispute with a Brazilian bank and increased accruals related to an ongoing antitrust case involving Whirlpool's Georgia-based Embraco compressor subsidiary.
In North America, sales fell 7 percent to $2.4 billion during the quarter while unit shipments fell about 5 percent, compared with an industrywide decline in factory shipments of about 10 percent in the U.S. Despite cost cuts, increased productivity and lower incentive compensation, operating profit fell 62 percent to $76 million amid lower volume, higher costs and the unfavorable product price/mix.
Looking ahead, Whirlpool said new and recently implemented price increases, along with increased production efficiencies and new product introductions will help position the company for stronger performance in the back-half of the year. Nevertheless, it still anticipates continued global economic volatility for the short term, and is projecting full-year 2011 U.S. industry unit shipments to decrease between 1 percent and 2 percent.
"While demand remains positive globally, we expect to continue to see demand volatility as consumers around the world remain impacted by economic uncertainties and high inflation," Fettig said. "We believe the announced and implemented price increases, innovation launches, cost reductions, and productivity improvements will drive positive margin improvement throughout the second half."
In a conference call this morning, Fettig told investors that the company experienced the great commodity and material cost inflation over the last year that it had ever seen. "I'd say margins have been hugely impacted at every level due to this inflation and we have to recoup it with pricing ... Selling products that you don't make any money on really doesn't add any value."
Product launches during the second quarter included:
- Whirlpool Gold gas and electric cooktops that offer advanced design and cooking performance;
- Whirlpool-brand ADA-compliant (American with Disabilities Act) ranges -- the 30-inch self-cleaning ranges meet accessibility guidelines established by the ADA to make daily activities easier for those with limited mobility;
- Maytag-brand Maxima 9000 front-load high-efficiency washing machine featuring an innovative "PowerSpray" feature that applies detergent solution evenly on the washer's contents;
- Maytag-brand EcoConserve top-freezer refrigerators featuring improved Energy Star qualifications, bins that are 50 times stronger than standard bins, and precise temperature control;
- KitchenAid-brand Architect Series II induction cooktops that offer rapid heating with greater energy efficiency compared to conventional cooktops; and
- Â· Jenn-Air-brand induction cooktops that feature what the company described as the most powerful cooking element available for the home kitchen.