Strength in Whirlpool's global businesses helped push the company's net earnings from continuing operations up 5 percent to $124 million during the first quarter, ended March 31, while last year's acquisition of Maytag helped send net sales soaring 24 percent to $4.4 billion for the period.
Excluding the impact of Maytag and currency translations, net sales increased by about 2 percent.
Within its North American unit, operating profit fell 18.9 percent to $159 million due to lower industry demand; significant increases in material costs for base metal, component parts and steel; and integration costs from the acquisition. Acquisition efficiencies, positive mix from new product offerings introduced over the past year, and price increases partially offset the higher costs, the company said.
Nevertheless, the addition of Maytag helped drive the division's sales up 27 percent to $2.7 billion for the quarter.
"Our first-quarter results reflect solid performance from our global businesses and continued strong consumer preference for our brand innovations," said Whirlpool chairman/CEO Jeff Fettig. "As expected, higher material costs and significantly lower demand in the United States negatively impacted our first-quarter results. The global environment is progressing as planned and we continue to expect lower industry demand in the United States through the first half of 2007 with gradual improvement during the balance of the year. The Maytag integration has gone extremely well and we are benefiting from the ramp up of efficiencies. Our efforts to revitalize growth for the Maytag brand are well underway."
During the quarter, the company completed the sales of the Hoover floor-care business and Jade commercial cooking group. On the product front, Whirlpool introductions included the Centralpark connector, a refrigerator with a plug-and-play platform on the door that provides power and support to various CE devices. Maytag launches included the Bravos high-efficiency, large-capacity top-load washer and dryer pair with impeller wash system and commercial-grade, stainless-steel wash basket.
Looking ahead, Whirlpool continues to expect 2007 U.S. industry unit shipments to decline approximately 2 percent to 3 percent. The company said it is addressing sluggish demand trends and heightened global material costs with "new product innovation, increased productivity throughout its global operations [and by] improving its overall mix of business and enacted cost-based price adjustments." Whirlpool also anticipates benefiting domestically from acquisition efficiencies and new Maytag product introductions during 2007.
"It has been slightly more than one year since we acquired Maytag Corp.," Fettig said. "During this time period, we have successfully completed the most critical portions of our integration plans, divested several businesses, executed plans to revitalize Maytag's product offering and significantly reduced our post-acquisition debt. We remain well positioned to realize efficiencies in excess of $400 million by 2008, and are very encouraged by recently introduced and future Maytag innovative product offerings."