BENTON HARBOR, MI -- Whirlpool Corporation announced third-quarter net earnings of $177 million, compared to net earnings of $79 million during the same period last year. Sales in 2011 were $4.6 billion, compared to $4.5 billion reported in the third quarter of 2010, a 2 percent increase driven by favorable currency.
Third-quarter operating profit totaled $136 million compared with $234 million in the prior year. Weaker global demand and higher raw material and oil-related costs during the quarter offset the benefits of ongoing productivity, cost reduction initiatives and previously announced price increases.
"During the quarter, we experienced weaker than expected global industry demand and elevated material costs," said Jeff M. Fettig, Whirlpool Corporation chairman and chief executive officer. "Consumers continue to show strong preference for our unmatched global brand portfolio and new product innovations, and we are beginning to see the benefits from previously announced price increases. However, our results were negatively impacted by recessionary demand levels in developed countries, a slowdown in emerging markets and high levels of inflation in material costs.
"As we previously indicated, in a period of uncertain economic growth and consumer demand, we would be prepared to take the necessary actions in order to expand our operating margins and improve our earnings. Given the weakening global economic environment, we are today announcing aggressive plans that will result in substantial cost and capacity reductions. The plans are the result of a comprehensive global review of our operations, products and manufacturing facilities."
The company's cost and capacity reduction plans include a workforce reduction of more than 5,000 positions primarily within North America and Europe (approximately a 10 percent workforce reduction in those regions). These plans include:
--Reduction of approximately 1,200 salaried positions.
--Closure of the refrigeration manufacturing facility in Fort Smith, Ark. by mid-2012. Production from Fort Smith will be consolidated into current North American sites to leverage existing resources and capacity.
--Relocation of dishwasher production from Neunkirchen, Germany to Poland in January 2012.
--Additional organizational efficiency actions in North America and Europe.
--Overall capacity is expected to be reduced by approximately 6 million units based on today's announcement and other actions.
These actions are expected to result in $400 million in annual cost savings by the end of 2013. The combination of these plans with announced price increases are expected to accelerate margin growth beginning in 2012. Restructuring expenses totaling approximately $500 million will be incurred over the period beginning in the fourth quarter of 2011 through 2013. The company now anticipates recording restructuring expenses of approximately $160 million in 2011 compared with its previous estimate of $75 million to $100 million.
THIRD-QUARTER REGIONAL REVIEW Whirlpool North America
Third-quarter sales of $2.4 billion decreased 2 percent from the prior year. Overall, North America unit shipments decreased approximately 3 percent, with U.S. industry unit shipments of major appliances (T7)(2) decreasing approximately 4 percent.
The North America region reported operating profit of $62 million compared to $114 million in the previous year. Results were favorably impacted by the implementation of previously announced price increases and improved product mix. These factors were offset by lower industry volumes, higher material costs and actions taken to adjust production volume to industry demand.
Based on the current economic outlook, the company now expects full-year 2011 U.S. industry unit shipments to decrease approximately 3 percent to 5 percent.
Whirlpool Europe, Middle East and Africa
Whirlpool Europe, Middle East and Africa reported third-quarter sales of $874 million, a 6 percent increase from the prior year. Unit shipments for the region were flat. Excluding currency translation, sales decreased approximately 3 percent.
An operating loss totaling $(12) million in the third quarter was down from $26 million in operating profit during the prior-year period. Higher material costs, unfavorable product price/mix and lower production levels were partially offset by ongoing productivity and cost reduction initiatives.
The company now expects full-year 2011 industry unit shipments to be flat to the prior year.
Whirlpool Latin America
Whirlpool Latin America reported third-quarter sales of $1.2 billion, an increase of 8 percent from the prior year. Latin America unit shipments decreased approximately 5 percent. Excluding currency translation, sales increased approximately 1 percent.
The region reported operating profit of $147 million compared to $143 million in the previous year. Results were favorably impacted by ongoing productivity initiatives, increased monetization of tax credits and product price/mix. These factors were partially offset by higher material costs and lower industry demand.
The company now expects full-year 2011 appliance industry shipments in the Latin America region to increase in the range of 0 to 5 percent.
Whirlpool Asia reported third-quarter sales of $215 million, an increase of 10 percent from the prior year. Asia unit shipments increased approximately 4 percent. Excluding the impact of currency, sales increased approximately 7 percent.
Operating profit totaling $4 million in the third quarter was down from $5 million in the prior-year period. Unfavorable product price/mix and higher material costs were partially offset by volume growth and ongoing productivity and cost reduction initiatives.
The company now expects full-year 2011 industry unit shipments in Asia to increase approximately 2 to 4 percent.