Whirlpool racked up record revenue and unit shipments for its North American business in the fourth quarter, delivering a 5.3 percent sales increase, to $2.2 billion. The major appliance maker said the North American results “reflect strong industry growth, demand for the company's brands and new product introductions.”
However, the rising cost of fuel and raw materials hit Whirlpool hard in its fourth-quarter pocketbook, as consolidated net income for the three months dropped to $97 million, from a year-ago $124 million. To address the challenging environment, Whirlpool announced global price increases of 5 percent to 10 percent, effective in January, in most key markets around the world.
Fourth-quarter consolidated sales jumped 8.1 percent, hitting $3.6 billion, up from $3.3 billion year-on-year. Excluding currency translations, net sales increased 5 percent.
“During the fourth quarter we announced that we were taking specific actions to offset unprecedented levels of material and oil-related costs increases,” said Jeff Fettig, chairman/CEO. “As predicted, these increases accelerated during the quarter, and we estimate that our material cost base will increase an additional 7 percent to 8 percent during 2005.
“We also have initiated actions to drive record levels of controllable productivity, to leverage our global operating platform and to reduce non-product investment-related spending,” said Fettig.
Fourth-quarter earnings were dampened by an approximate $150 million increase for material and logistics costs, yet the downward pressure on Whirlpool operating margins was mitigated by higher volume, record levels of productivity, price increases, lower incentive compensation expense and cost controls, Fettig said. Earnings also reflect a reduction in tax rate and a gain on an equity investment.
Whirlpool's higher cost structure comes with some good news. In the fourth quarter, ended Dec. 31, U.S. industry demand for major appliances in North America climbed 10.7 percent, compared with 2003, said Whirlpool. For the full year, industry unit shipments in North America rose 8.3 percent.
“Overall global industry volume remained robust during the quarter as we continued to experience strong consumer demand for our brands and innovation,” continued Fettig.
For the 12 months, Whirlpool sales increased 8.8 percent to a record $13.2 billion, compared with $12.2 billion the previous year. Excluding currency translation, sales climbed about 6 percent.
Net earnings for the 12 months slipped to $406 million from a year-earlier $414 million as rising material and oil-related expenses took a toll through 2004.