) saw its adjusted net income of $1.55 per share in the second
quarter of 2012 nearly doubled from 81 cents in the same period
last year but falling short of the Zacks Consensus Estimate of
$1.64. However, before adjustments, Whirlpool swung to a profit of
$113 million or $1.43 per share in the quarter from a loss of $161
million or $2.10 in the year-ago period.
Revenues in the quarter fell 4.6% to $4.5 billion in the quarter
and missed the Zacks Consensus Estimate of $4.6 billion. Although
Whirlpool's product price/mix remained strong, foreign currency
translation and lower monetization of Brazilian (BEFIEX) tax
credits weighed on the top line.
Whirlpool's business in the Americas continued to do well and
management is of the opinion that the company's performance was
better than the last year. However, foreign currency effects, lower
demand and cost inflation proved to be headwinds in the quarter. A
look at the region wise performance would reveal things better.
Revenues increased 4% to $2.5 billion, despite a 2% drop in
shipments. The improved performance was driven by cost and capacity
reduction measures and improvement in product price/mix.
Moreover, Whirlpool handled the challenge of rising costs quite
efficiently with the help of price increments in the quarter. As a
result, its operating profit increased more than two-fold to $186
million in the quarter from $76 million last year.
However, Whirlpool lowered its U.S. industry unit shipments
growth forecast for the year due to economic pressures. The company
now expects shipments to be either flat or down 2% this year as
against the earlier expectation of growth at the lower end of
Revenues declined to $1.2 billion from $1.3 billion last year.
However, excluding the effects of currency translation and tax
credits, revenues grew 8% year over year. On an adjusted basis,
operating income increased to $101 million from $87 million in the
prior year, driven by a favorable product price/mix, partially
offset by unfavorable currency and lower monetization of tax
On a positive note, Whirlpool raised its Latin American
appliance industry shipments forecast for 2012. The company expects
appliance industry shipments in Latin America to grow in the range
of 5%-7% this year as against the earlier expectation of 2%-5%.
, Middle East and Africa:
Revenues plummeted almost 18% to $692 million in the quarter as
shipments fell 7%. However, excluding the effects of currency
translation, the decline in revenues was much less at 7%.
The effects of the sovereign debt crisis in Europe were visible
in Whirlpool's performance in the region, as the company had to
contend with low consumer demand and unfavorable currency.
Whirlpool expects industry unit shipments in the region to decline
in the range of 2%-5% in 2012.
Revenues went down to $241 million from $257 million last year.
However, excluding the negative impact of currency translation,
revenues increased 6%, helped by a 1% increase in shipments.
Nevertheless, Whirlpool slashed the region's industry unit-shipment
guidance for 2012. It expects industry shipments to grow 0%-2% this
year compared with the earlier forecast of 2%-4%.
Whirlpool had cash and cash equivalents of $426 million as of
June 30, 2012 compared with $1.1 billion as of December 31, 2011.
Long-term debt was $1.9 billion as of June 30, 2012 compared with
$2.1 billion as of December 31, 2011.
The company used cash flow of $355 million from operations in
the first six months of 2012 compared with $234 million in the same
period last year. Meanwhile, capital expenditures decreased to $187
million from $259 million in the first half of 2011. Whirlpool
reiterated its free cash flow guidance of $100 million-$150 million
For full year 2012, Whirlpool expects to report earnings per
share of $5.00 to $5.50. However, excluding restructuring charges
and Brazilian tax credits, the company anticipates earnings per
share of $6.50 to $7.00.
Whirlpool is considered to be the largest home-appliances
manufacturer in the world, ahead of
), LG, Samsung and
General Electric Co.
). The company is placed among the leading home appliances makers
in India and Europe.
Whirlpool's cost and capacity reduction initiatives are
noteworthy, resulting in improved margins. However, we are
concerned about the ongoing weakness in Europe, a region where it
expects shipments to decline this year.
Currently, Whirlpool retains a Zacks #3 Rank, reflecting a
short-term (1 to 3 months) Hold rating and, we have a long-term
(more than 6 months) Neutral recommendation on the stock.
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WHIRLPOOL CORP (WHR): Free Stock Analysis
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