The FINANCIAL — Whirlpool Corporation (NYSE: WHR) announced on April 26 that first-quarter net earnings rose 141 percent to $164 million, or $2.13 per diluted share, compared to $68 million, or $0.91 per diluted share reported during the same period last year.
Sales of $4.3 billion increased 20 percent from the $3.6 billion reported in the first quarter of 2009. Excluding the impact of foreign exchange translation, the company's first-quarter sales increased approximately 11 percent.
“First-quarter operating profit totaled $241 million compared with $166 million in the prior year. Results were favorably impacted by cost reduction and productivity initiatives, increased sales volume and favorable foreign currency effects. These favorable factors were partially offset by lower price/mix. First-quarter adjusted operating profit(1) totaled $287 million compared to $126 million in the prior year,” Whirlpool Corporation informs.
"We are pleased with the strong operational performance we reported in all of our regions," said Jeff M. Fettig, chairman and chief executive officer of Whirlpool Corporation. "In addition, we are encouraged with the 18 percent increase in our global unit volumes during the quarter. Our results reflect our lower breakeven point, continued innovation investment, and our expanding global product offerings. By continuing to drive productivity improvements and leveraging our lower breakeven point, we are able to expand our operating margins and accelerate profitable growth."
The company reported cash flow from operations of $71 million for the first quarter. Whirlpool Corporation generated free cash flow(2) of $(74) million during the first quarter compared with $(371) million in the prior year.
FIRST-QUARTER REGIONAL REVIEW
Whirlpool North America
First-quarter sales of $2.3 billion increased 7 percent from the prior year. Excluding the impact of foreign exchange translation, first-quarter sales increased approximately 5 percent. North America unit shipments increased 11 percent. U.S. industry unit shipments of major appliances (T7)(3) increased 6 percent during the first quarter.
The North America region reported operating profit of $94 million compared to $164 million in the previous year. First-quarter 2010 results included an expense of $46 million related to special items compared to a benefit of $64 million in the prior year. Special items are described in the attached supplemental information. First-quarter 2010 adjusted operating profit for the North America region totaled $140 million compared to $100 million in the prior year. The improvement was primarily the result of cost reduction, productivity initiatives and increased sales volume. These factors were partially offset by lower year-over-year product price/mix.
Based on the current economic outlook, the company expects full-year 2010 U.S. industry unit shipments to increase between 3 percent and 5 percent compared to the previous outlook of a 2 percent to 4 percent increase.
Whirlpool Europe
Whirlpool Europe reported first-quarter sales of $739 million, a 6 percent increase from the prior year. Excluding the effects of currency, sales decreased approximately 2 percent. Overall industry unit demand during the quarter was equal to the prior year.
The region reported an operating profit of $27 million during the first quarter compared with the breakeven results reported in the previous-year period. Results were favorably impacted by cost reduction and productivity initiatives.
The company expects full-year 2010 industry unit shipments to be approximately equal to 2009 levels.
Whirlpool Latin America
Whirlpool Latin America reported record first-quarter net sales of $1.1 billion, an increase of 65 percent from the prior year. Excluding currency translation, sales increased approximately 40 percent.
Operating profit totaled $167 million in the first quarter compared with $57 million in the prior year. The improvement in profitability is primarily related to higher sales volumes, higher productivity and favorable foreign currency. These items were partially offset by lower price/mix. During the first quarter of 2009, the region recorded a $26 million expense related to an operating tax settlement which did not recur during 2010.
The company currently anticipates full-year 2010 Brazilian appliance shipments will increase approximately 10 percent compared to the previous outlook of a 5 percent to 10 percent increase.
Whirlpool Asia
Whirlpool Asia reported first-quarter sales of $192 million, increasing 60 percent from the prior year. Excluding the impact of currency, sales increased 49 percent. Operating profit during the quarter totaled $11 million, an increase of $6 million from the prior year. The year-over-year increase in operating profit was mainly attributable to higher unit volume and was partially offset by lower price/mix.
The company anticipates full-year 2010 industry unit shipments in Asia to be up 5 percent to 8 percent compared to the previous expectation of a 3 percent to 5 percent increase compared to 2009 levels.
Outlook
For the full-year 2010, Whirlpool Corporation expects earnings per diluted share between $8.00 and $8.50 compared to its previous outlook of $6.50 to $7.00. For the full year, the company expects to generate free cash flow(2) of approximately $500 million to $600 million. This compares to the previous outlook of between $400 million and $500 million. The company's earnings and free cash flow projections are based upon current economic forecasts and business plans.
"We are increasing our outlook to reflect our strong first-quarter results and our ongoing productivity initiatives," said Fettig. "While economic uncertainty remains, Whirlpool Corporation is well positioned to substantially grow earnings from prior-year levels. Our innovation pipeline is strong and we continue to make the appropriate investments in our global brand offerings to drive growth across the company. This enables us to meet the needs of more people, nearly everywhere in the world, in more ways than ever before."
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