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October 24, 2009

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Cost cuts help but net still falls

THE world's biggest home appliance maker continued to cut costs in the third quarter, but Whirlpool Corp's profit tumbled 47 percent as shoppers are still holding off on big-ticket purchases during the recession.

The cost savings did lead Whirlpool to raise its full-year earnings guidance even though it still sees economic uncertainty ahead. The company, which is based in Benton Harbor, Michigan, has cut jobs and closed a factory to deal with lower sales.

Whirlpool, whose brands include Maytag and KitchenAid as well as its namesake, earned US$87 million, or US$1.15 per share. That's down from US$163 million, or US$2.15 per share, a year earlier.

Quarterly results included US$43 million, or 50 cents per share, for a settlement with the Brazilian competition commission.

Sales for the three months ended September 30 dropped 8 percent to US$4.5 billion from US$4.9 billion. Removing foreign currency fluctuations, revenue dipped about 3 percent.

The performance topped the estimates of analysts polled by Thomson Reuters for a profit of 77 cents per share on revenue of US$4.28 billion. Analysts' estimates generally exclude one-time items.

Whirlpool has found that many shoppers are still putting off appliance purchases amid a recession complicated by tight credit and falling housing prices, both of which hurt the market for appliances.

In its North America division, revenue dropped 9 percent as the United States industry unit shipments of major appliances declined 6 percent. The European unit faced a 17-percent drop in revenue, with overall industry unit demand down about 10 percent.

Whirlpool's Latin American unit fared better, with sales up on increased Brazilian appliance demand. Sales also improved for its Asian business.


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