Whirlpool 1Q net income climbs; global sales rise

AP News
Posted: Apr 27, 2011 12:02 PM
Whirlpool 1Q net income climbs; global sales rise

Whirlpool Corp.'s first-quarter net income rose 3 percent as it sold more appliances even after it raised prices to help combat rising material costs.

Cost-cutting also helped the Benton Harbor, Mich., company, whose other brands include Maytag and Kitchenaid. It also backed its full-year earnings guidance Wednesday.

The world's biggest appliance maker is not alone in its concern about increasing material costs. Swedish competitor Electrolux AB said Wednesday that prices on some of its most important raw materials, particularly plastics, continue to climb.

Whirpool Chairman and CEO Jeff Fettig said during a conference call that the company now anticipates its raw material costs will range from $400 million to $450 million for the year. That is higher than the $250 million to $300 million projection given in February.

Fettig said Whirlpool will look to offset the increase through price increases and cost-cutting.

"We have implemented cost-based price increases in many regions around the world, continue to introduce a strong cadence of innovative new products and remain focused on accelerating our cost reduction and productivity improvements to manage higher material cost inflation," he said in a statement.

For the period ended March 31, Whirlpool's net income rose to $169 million, or $2.17 per share. That's up from $164 million, or $2.13 per share, a year ago.

Excluding an adjustment to lower the total cost of a dishwasher recall, earnings were $2.11 per share. Analysts polled by FactSet expected $1.55 per share.

Revenue climbed 3 percent to $4.4 billion as sales improved, besting Wall Street's $4.26 billion.

In North America, revenue rose slightly to $2.3 billion while unit shipments climbed about 4 percent. U.S. shipments of major appliances dipped about 1 percent.

Marc Bitzer, president of Whirlpool North America, said the division was helped by reduced promotions and higher prices.

Revenue for Europe, the Middle East and Africa edged up 1 percent to $743 million, with industry unit demand flat. Latin America and Asia both reported 8 percent revenue increases.

Fettig said demand is choppy and has been for the past couple of quarters but that there is continued overall improvement.

"We see even in today's environment consumers who want and will pay for a truly relevant innovation," he said.

Analyst Laura Champine of Cowen and Co. said in a client note that Whirlpool's North America and Latin America revenue results topped her estimates and recommended investors buy the stock because of its appealing share price and strong growth potential.

Looking ahead, Whirlpool still expects full-year earnings of $12 to $13 per share. Analysts predict $11.87 per share for the year.

Electrolux, which makes refrigerators and vacuums, reported Wednesday that its first-quarter profit fell because of unfavorable currency exchange rates, price pressure and increased raw material costs. The company said it plans to raise prices in North America and Europe.

Whirlpool's stock added 47 cents to $88.33 in midday trading.