Whirlpool Misses Earnings Expectations

Whirlpool Misses Earnings Expectations

Whirlpool Misses Earnings Expectations

The FINANCIAL -- Whirlpool Corporation announced on April 28 first-quarter GAAP net earnings of $191 million, or $2.38 per diluted share, compared to $160 million, or $2.02 per diluted share, reported for the same prior-year period.

Ongoing business earnings per diluted share totaled $2.14, compared to $2.20 in the same prior-year period. The benefit of cost and capacity-reduction initiatives, ongoing cost productivity and benefits from the acquisition integration activities were offset by unfavorable currency and a weakened demand environment in Brazil, according to Whirlpool.

Net sales in the quarter were a first-quarter record $4.8 billion compared to $4.4 billion during the same prior-year period, an increase of over 11 percent. Excluding the impact of both foreign currency and Brazilian (BEFIEX) tax credits, sales increased over 23 percent, primarily driven by the acquisitions.

"Our integration plans in Europe and China remain on track and we have taken actions to overcome recent currency movements," said Jeff M. Fettig, chairman and chief executive officer of Whirlpool Corporation. "We continue to invest in our leading brand portfolio and innovative new products while adjusting to a continuing volatile global economy."

First-quarter GAAP operating profit totaled $303 million compared to $281 million in the same prior-year period. Record first-quarter ongoing business operating profit totaled $318 million, or 6.6 percent of sales, compared to $302 million, or 6.9 percent of sales, in the same prior-year period. Ongoing business operating margins benefited from acquisition integration activities and cost and capacity-reduction initiatives, which were offset by unfavorable currency.

For the three months ended March 31, 2015, the company reported cash used in operating activities of $(569) million compared to cash used in operating activities of $(339) million in the same prior-year period. Whirlpool Corporation reported free cash flow of $(651) million in the first quarter of 2015 compared to free cash flow of $(456) million in the same prior-year period. As expected, the decrease in free cash flow was primarily driven by seasonal working capital requirements associated with the acquisitions.

OUTLOOK

Whirlpool Corporation has adjusted its full-year 2015 guidance to reflect the impact of unfavorable currency and a weakened demand environment in Brazil. The company now expects full-year GAAP net earnings per diluted share available to Whirlpool of $9.00 to $10.00 and full-year ongoing business earnings per diluted share of $12.00 to $13.00.

Whirlpool Corporation recently announced cost-based price increases in Latin America and Eastern Europe, which along with strong cost productivity programs are expected to deliver significant second-half 2015 margin expansion. The company expects to deliver record sales and ongoing earnings for the year.

For the full-year 2015, the company now expects to generate free cash flow of approximately $700 million. Included in this guidance are restructuring cash outlays of up to $250 million, capital spending of approximately $750 million to $800 million and U.S. pension contributions of approximately $72 million.

"Our previously outlined long-term growth strategy remains on track," said Fettig, "and we are committed to creating significant shareholder value with our larger global platform, competitive cost structure, industry leading brands and broad product offering."

FIRST-QUARTER REGIONAL REVIEW

Whirlpool North America

Whirlpool North America reported first-quarter net sales of $2.3 billion, up slightly from the same prior-year period. Excluding the impact of currency, sales increased over 2 percent.

The region reported a first-quarter operating profit of $276 million, compared to $228 million in the same prior-year period. During the first quarter of 2015, the region incurred a one-time, non-cash benefit plan curtailment gain of approximately $47 million. Ongoing business segment operating profit totaled $230 million, or 9.8 percent of sales, compared to $228 million, or 9.8 percent of sales, in the same prior-year period. Ongoing cost productivity and higher unit volumes were offset by unfavorable currency and the completion of prior-year product transitions.

The company expects full-year 2015 industry unit shipments to increase by approximately 4 percent.

Whirlpool Europe, Middle East and Africa

Whirlpool Europe, Middle East and Africa reported first-quarter net sales of $1.3 billion compared to $0.7 billion in the same prior-year period.

The region reported first-quarter operating profit of $17 million, compared to $7 million in the same prior-year period.  During the first quarter of 2015, the region incurred a one-time, non-cash pension settlement charge of approximately $12 million. Ongoing business segment operating profit totaled $35 million, or 2.7 percent of sales, compared to $7 million, or 1.0 percent of sales, in the same prior-year period. The benefits from the acquisition integration activities, ongoing cost productivity and the benefit of cost and capacity-reduction initiatives more than offset unfavorable currency.

The company expects full-year 2015 industry unit shipments to be flat to up 2 percent.

Whirlpool Latin America

Whirlpool Latin America reported first-quarter net sales of $0.9 billion, compared to $1.2 billion in the same prior-year period. Excluding the impact of currency and BEFIEX tax credits, sales decreased approximately 11 percent.

The region reported first-quarter GAAP operating profit of $59 million, compared to $123 million in the same prior-year period. During the first quarter of 2014, the company monetized $14 million of BEFIEX tax credits. Ongoing business segment operating profit(4) totaled $59 million, or 6.6 percent of sales, compared to $109 million, or 9.2 percent of sales, in the same prior-year period. Improved product price/mix was offset by unfavorable currency and lower unit volumes due to a weaker demand environment in Brazil.

The company now expects full-year 2015 industry unit shipments to be down 10 to 12 percent.

Whirlpool Asia

Whirlpool Asia reported first-quarter net sales of $378 million compared to $166 million in the same prior-year period.

The region reported a first-quarter GAAP operating profit of $24 million, compared to an operating profit of $5 million in the same prior-year period. Ongoing business segment operating profit totaled $26 million, or 6.9 percent of sales, compared to $5 million, or 2.9 percent of sales, in the same prior-year period. The benefits from the acquisition integration activities, ongoing cost productivity, improved price/mix and the benefits of cost and capacity-reduction initiatives positively impacted margins.