BENTON HARBOR, MICH. –
Price hikes, cost reductions 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 are beginning to see the benefits from previously announced price increases. However, our results were negatively impacted by recessionary demand levels in developed countries, a slowdown in emerging markets and high levels of inflation in material costs.”
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.