The FINANCIAL — Whirlpool Corporation announced on April 24 first-quarter GAAP net earnings of $153 million, or $2.01 per diluted share, compared to $150 million, or $1.92 per diluted share, reported for the same prior-year period. First-quarter ongoing business earnings per diluted share totaled $2.50 compared to $2.63 in the same prior-year period.
“We made progress toward our goals of revenue growth and free cash flow generation, with strong growth and margin expansion in North America and Latin America,” said Jeff M. Fettig, chairman and chief executive officer of Whirlpool Corporation. “As we continue to execute our plans and work through the elevated complexity of our European integration, we remain confident in our ability to deliver both $1 billion of free cash flow and record earnings per share in 2017.”
First-quarter net sales were $4.8 billion, compared to $4.6 billion in the same prior-year period. Excluding the impact of currency, sales increased 3 percent.
First-quarter GAAP operating profit totaled $264 million, or 5.5 percent of sales, compared to $285 million, or 6.2 percent of sales, in the same prior-year period. First-quarter ongoing business operating profit totaled $310 million, or 6.5 percent of sales, compared to $341 million, or 7.4 percent of sales, in the same prior-year period. On a GAAP and ongoing basis, cost productivity and unit volume growth partially offset unfavorable impacts from product price/mix and raw material inflation; on a GAAP basis, prior-year period results were negatively impacted by acquisition-related integration costs, according to Whirlpool Corporation.
For the three months ended March 31, 2017, Whirlpool Corporation reported cash used in operating activities of $(435) million compared to $(661) million in the same prior-year period. The Company reported free cash flow of $(497) million for the first three months of 2017 compared to $(739) million in the same prior-year period, driven by the Company’s focus on working capital optimization.
FIRST-QUARTER REGIONAL REVIEW
Whirlpool North America
Whirlpool North America reported first-quarter net sales of $2.6 billion, compared to $2.4 billion in the same prior-year period. Excluding the impact of currency, sales increased 7 percent.
The region reported first-quarter GAAP operating profit of $287 million, or 11.2 percent of sales, compared to $250 million, or 10.4 percent of sales, in the same prior-year period. Ongoing business segment operating profit(4) totaled $287 million, or 11.2 percent of sales, compared to $253 million, or 10.5 percent of sales, in the same prior-year period. On a GAAP and ongoing basis, unit volume growth and cost productivity more than offset raw material inflation.
The Company continues to expect full-year 2017 industry unit shipments in the U.S. to increase by 4 to 6 percent.
Whirlpool Europe, Middle East and Africa
Whirlpool Europe, Middle East and Africa reported first-quarter net sales of $1.0 billion, compared to $1.2 billion in the same prior-year period. Excluding the impact of currency, sales decreased 9 percent.
The region reported a first-quarter GAAP operating loss of $(17) million, or (1.7) percent of sales, compared to GAAP operating profit of $55 million, or 4.7 percent of sales, in the same prior-year period. Ongoing business segment operating losses(4) totaled $(17) million, or (1.7) percent of sales, compared to ongoing business segment operating profit(4) of $58 million, or 4.9 percent of sales, in the same prior-year period.
The primary drivers of EMEA operating performance were as follows:
The region experienced peak integration complexity due to headquarters integration, including legal entity mergers and systems implementation.
This complexity led to a temporary disruption in the region’s supply chain network and product availability.
Consistent with our expectations, operating margins were negatively impacted by currency and demand weakness in the U.K.
As the Company completes key elements of the integration work in Europe, the Company expects operating margin performance in the second quarter to sequentially improve and for that improvement to continue in the second half of 2017.
The Company now expects full-year 2017 industry unit shipments to be flat to up 2 percent.
Whirlpool Latin America
Whirlpool Latin America reported first-quarter net sales of $818 million, compared to $705 million in the same prior-year period. Excluding the impact of currency, sales increased 4 percent.
The region reported first-quarter operating profit of $68 million, or 8.3 percent of sales, compared to $43 million, or 6.1 percent of sales, in the same prior-year period, driven by favorable product price/mix and cost productivity which more than offset raw material inflation.
The Company continues to expect full-year 2017 industry unit shipments in Brazil to be flat.
Whirlpool Asia
Whirlpool Asia reported first-quarter net sales of $419 million, compared to $371 million in the same prior-year period. Excluding the impact of currency, sales increased 16 percent.
The region reported first-quarter GAAP operating profit of $23 million, or 5.5 percent of sales, compared to $25 million, or 6.9 percent of sales, in the same prior-year period. Ongoing business segment operating profit(4) totaled $23 million, or 5.5 percent of sales, compared to $27 million, or 7.3 percent of sales, in the same prior-year period. On a GAAP and ongoing basis, unit volume growth was more than offset by raw material inflation and unfavorable product price/mix.
The Company continues to expect full-year 2017 industry unit shipments to be flat to up 2 percent.
Regional Summary
“We continue to adapt our operating plans globally to a dynamic external environment, and our strong performance in North America and Latin America clearly demonstrates our ability to create value in challenging environments,” said Marc Bitzer, president and chief operating officer of Whirlpool Corporation. “While 2017 is the most complex year of our European integration, we remain confident that we will complete key elements of the integration and deliver profitable growth in Europe this year.”
OUTLOOK
For the full-year 2017, the Company continues to expect to generate cash from operating activities of $1.7 to $1.75 billion and free cash flow(3) of approximately $1 billion. Included in this guidance are primarily acquisition-related restructuring cash outlays of up to $165 million, legacy product warranty and liability costs of $70 million, pension contributions of $45 million and, with respect to free cash flow(3), capital spending of $700 to $750 million.
For the full-year 2017, as a result of temporary integration challenges in the EMEA region, Whirlpool Corporation now expects GAAP earnings per diluted share of $12.65 to $13.40 and ongoing business earnings per diluted share(1) of $14.75 to $15.50.
“We are focused on creating long-term value for our shareholders through our strong brands, innovative new products and relentless focus on cost takeout,” said Fettig. “We remain confident in the strength of our business, and we will continue returning strong levels of cash to our shareholders through share repurchases and increased dividend.”
Discussion about this post