Benton Harbor, Mich. — Strong overseas sales, combined with greater operating efficiencies, helped Whirlpool surmount the U.S. housing market slump to post record sales and earnings for the fourth quarter of 2007.
Net revenue rose over 7 percent to $5.3 billion and earnings from continuing operations increased 41 percent to $187 million for the three months ending Dec. 31, while operating profit increased 74 percent to $332 million and operating profit margins grew 2.4 percent.
Whirlpool attributed the gains to continued strong momentum within its international business, favorable currency exchange rates and “significantly higher” operating profit performance within North America. The latter was achieved through improved cost-efficiencies stemming from its acquisition of Maytag, productivity improvements and improved product mix.
Results were partially offset by “ongoing macroeconomic challenges” due to higher material and oil-related costs and significantly lower industry demand within the United States, the company said.
“The year was filled with significant challenges and opportunities,” said Whirlpool chairman/CEO Jeff Fettig. “We delivered record financial results in the face of both the most challenging U.S. industry demand environment in more than two decades and unprecedented global material price inflation. Our performance in this environment highlights the strength of our global brands and the geographic diversity of our global operating platform. During 2007, we completed the integration of the largest acquisition in the company’s history, introduced a continuous cadence of new global product innovation and delivered record international results.”
In North America, fourth-quarter sales declined less than 1 percent to $3 billion against a backdrop of industrywide declines of 6 percent in unit shipments, Whirlpool said, thanks to a “strong brand portfolio of innovative products” that continued to drive consumer demand and improved average sales values per unit.
Operating profit increased 41 percent to $175 million in North America and operating profit margins expanded from 4 percent to 5.7 percent year-over-year, as “strong Maytag efficiency realization, favorable product mix and productivity improvements” partially offset significantly higher material and oil-related costs as well as lower industry demand, the company said.
For the full 2007 calendar year, net sales rose 7.3 percent to $19.4 billion, operating profit increased 29 percent to nearly $1.1 billion, and earnings from continuing operations grew 33 percent to $647 million.
Looking ahead, the company expects full-year 2008 U.S. industry unit shipments to decline approximately 3 percent to 5 percent based on current economic conditions. Fettig said that Whirlpool is adjusting its cost structure to address lower demand both here and in Europe, and plans to offset increasing material- and oil-related costs through cost-based pricing adjustments and productivity improvements. “These actions, combined with our strong portfolio of brands, continuous flow of innovation and increased brand support should enable us to overcome the negative economic environment and deliver improved results for our shareholders,” he said.