Whirlpool beats on cost cuts, ups full-year view

Whirlpool Corp reported a higher-than-expected quarterly profit on Friday as cost cuts offset weak sales, and the world's biggest appliance maker raised its full-year forecast. The company attributed the higher outlook to downsizing and cost reductions, adding that demand was still uncertain in many markets.
The maker of Maytag and KitchenAid appliances said third-quarter net income fell to $87 million, or $1.15 a share, from $163 million, or $2.15 a share, a year earlier. Analysts on average were expecting a profit of 77 cents per share, according to Thomson Reuters I/B/E/S. Sales at the Benton Harbor, Michigan-based company fell 8 percent to $4.5 billion.
Sales at appliance makers like Whirlpool and Sweden's Electrolux have suffered in the global economic slowdown as consumers curbed their inclination to buy goods they see as not essential. Whirlpool, whose other brands include Jenn-Air, Amana, Brastemp, Consul and Bauknechtand, has seen consumers continue to delay replacement purchases, even for appliances that are beyond repair. And some customers have traded down to lower-priced brands from competitors.
Whirlpool has resorted to aggressive cost-cutting as it waits for demand to pick up. In late August, Whirlpool announced plans to shut a plant in Evansville, Indiana, and shift some production to Mexico next year, moves that will eliminate about 1.6 percent of its workforce.
The company has already consolidated its Chinese operations, reduced its contribution to retirement plans, frozen salaries, closed other plants and cut capital spending to reduce costs. For all of 2009, Whirlpool expects earnings of about $4.25 a share, up from its prior outlook of $3.50 to $4.00. Analysts on average were expecting $4.05.
Because of its cost-saving efforts, the company expects free cash flow of about $500 million to $600 million for the full year, well above its prior forecast of $300 million to $400 million. While Whirlpool's sales in Asia and Brazil improved, demand was significantly lower in Europe.
Based on current economic conditions, the company expects US industry unit shipments to fall about 10 percent in 2009 from 2008 levels. It had earlier forecast a decline of 10 percent to 12 percent. In Europe, Whirlpool continues to expect full-year 2009 industry unit shipments to fall about 13 percent from last year.