Whirlpool Corp. (WHR) reported Thursday a decline in its first-quarter profit, reflecting sharply lower tax credits and decline in revenue due to weak appliance demand. Adjusted earnings more than doubled from last year as strong profitability improvement in the North America and Latin America regions helped offset weak economic conditions in Europe. The home appliances maker backed its earnings forecast for fiscal 2012.
Chairman and Chief Executive Officer Jeff Fettig said, "The first quarter was a strong start to the year as we benefited from our margin expansion efforts and continued innovation investments. Our cost and capacity-reduction initiatives and previously implemented cost-based pricing actions are on track to deliver our operating profit margin, earnings and free cash flow guidance for the year."
While announcing its previous quarterly results, Fettig had said that the company is executing strong actions to continue to improve operating margins through cost and capacity reduction initiatives, ongoing productivity programs and previously announced price increases.
For its first quarter, net earnings declined to $92 million or $1.17 per share from prior year's $169 million or $2.17 per share.
The latest quarter results included restructuring expenses of $0.32 per share, partly offset by Brazilian tax credits (BEFIEX) of $0.08 per share. Meanwhile, the prior year's results were benefited by Brazilian tax credits of $0.85 per share and energy tax credits of $0.69 per share, slightly offset by restructuring expenses.
Adjusted earnings per share, which excluded items, climbed to $1.41 from last year's $0.64. On average, five analysts polled by Thomson Reuters expected earnings of $1.12 per share. Such estimates typically exclude special items.
Quarterly net sales edged down 1 percent to $4.35 billion and missed Wall Street estimate of $4.38 billion, hurt by weaker appliance demand, unfavorable currency and lower monetization of tax credits.
On a geographical basis, sales in North America declined 1 percent to $2.2 billion as unit shipments fell about 7 percent, with U.S. industry unit shipments of major appliances decreasing approximately 10 percent. Latin American sales grew 3 percent to $1.3 billion with a 2 percent increase in unit shipments.
In Europe, Middle East and Africa, sales fell 8 percent as shipments declined mainly due to continued weak consumer demand across the euro zone, lower production to adjust to lower industry demand in the region and higher material costs. Asian sales also fell 3 percent on unfavorable currency, excluding which sales grew 2 percent on higher shipments.
For fiscal 2012, Whirlpool continues to expect earnings per share of $5 to $5.50 and, adjusted earnings per share of $6.50 to $7. Analysts expect earnings of $6.21 per share for the year.
The company continues to expect to generate free cash flow between $100 million and $150 million.
For the year, the company now expects U.S. industry unit shipments to trend to the low end of its previous 0 to 3 percent range.
Whirlpool shares closed Wednesday's regular trading at $68.89, up $2.56 or 3.86 percent.
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