Whirlpool Corporation
(
WHR
) revealed a profit of $2.62 per share for the fourth quarter of
2011 compared with $171 million or $2.19 per share in the same
period last year. However, excluding special items, profits
decreased to 32 cents per share from 43 cents per share in the
fourth quarter of 2010. It was significantly lower than the Zacks
Consensus Estimate of $1.93 per share.
Revenues in the quarter fell marginally to $4.9 billion from
$5.0 billion as improving price/mix was offset by unfavorable
currency and lower industry demand. Revenues were slightly lower
than the Zacks Consensus Estimate of $5.0 billion.
Operating profit (adjusted) rose marginally to $128 million from
$127 million in the fourth quarter of 2010. It was positively
impacted by continued improvement in price mix and cost
productivity.
For full year 2011, the company's profits dipped to $4.99 per
share compared with $7.97 per share in 2010. Excluding special
items, profits were $2.05 per share compared with $4.47 per share
in 2010. It was also significantly lower than the Zacks Consensus
Estimate of $9.21 per share.
Sales in the year went up 2% to $18.7 billion, which was in line
with the Zacks Consensus Estimate. Operating profit declined to
$792 million compared with $1.0 billion in 2010, mainly driven by
significantly higher material and oil-related costs.
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 reporting
earnings per share of $6.50 to $7.00.
Regional Results
Sales in North America rose a meager 1% to $2.6 billion.
Operating profit improved to $202 million from $53 million in the
previous year. It was favorably affected by the implementation of
previously announced price increases and improved product mix that
more than offset lower industry volumes, higher material costs and
the impact from lower production volumes. Whirlpool expects U.S.
industry unit shipments to increase in the range of 0%-3% in
2012.
Sales in Europe, Middle East and Africa fell 8% to $848 million.
The region had an operating loss of $32 million in the quarter
compared to a profit of $29 million in the prior-year period. The
decline in operating profit was attributable to the ongoing
financial crisis Europe, which led to weak consumer demand across
the euro zone, higher material costs, lower production to adjust to
lower industry demand and unfavorable product price/mix. As a
result, the company expects industry unit shipments to decrease in
the range of 2%-5% in 2012.
Sales in Latin America dipped 5% to $1.3 billion. Operating
profit decreased to $155 million compared with $193 million in the
previous year quarter as favorable product price/mix was offset by
lower monetization of tax credits, higher material costs,
unfavorable currency and reduced production levels. However, the
company expects appliance industry shipments in the region to
increase in the range of 2%-5% for full-year 2012.
Sales in Asia decreased 2% to $200 million. Operating profit
went down to $2 million from $4 million in the fourth quarter of
2010 as favorable product price/mix was offset by higher material
costs and weak consumer demand in India. However, the company
expects industry unit shipments in Asia to increase 2%-4% in
2012.
Financial Position
Whirlpool had cash and cash equivalents of $1.1 billion as of
December 31, 2011 compared with $1.4 billion as of December 31
2010. Long-term debt was flat at $2.5 billion as of December 31
2011 compared with the same as of December 31 2010.
The company generated cash flow of $530 million from operations
in 2011, a decline from $1.1 billion in 2010 due to lower profit
and declines in deferred taxes and payable (net) and accrued
pension. Meanwhile, capital expenditures increased to $608 million
from $593 million in 2010.
For full-year 2012, Whirlpool expects to generate free cash flow
between $100 million and $150 million.
Our Take
Whirlpool is considered the largest home-appliances manufacturer
in the world, ahead of
Electrolux
AB
(
ELUXY
), LG, Samsung and
General Electric Co.
(
GE
). The company is placed among the leading home appliances makers
in India and Europe.
Despite its market-leading position, we are concerned about the
ongoing weakness in Europe and high customer concentration faced by
the company. The company's large trade customers include
Sears Holdings Corporation
(
SHLD
),
Lowe's Companies Inc.
(
LOW
),
The Home Depot, Inc.
(
HD
), Casas Bahia,
Best Buy Co. Inc.
(
BBY
) and Ikea, who have significant leverage as buyers.
As a result, the shares of Whirlpool are currently maintaining a
Zacks#3 Rank that translates into a "Hold" rating for the short
term (1 to 3 months).
BEST BUY (
BBY
): Free Stock Analysis Report
GENL ELECTRIC (
GE
): Free Stock Analysis Report
HOME DEPOT (
HD
): Free Stock Analysis Report
LOWES COS (
LOW
): Free Stock Analysis Report
SEARS HLDG CP (
SHLD
): Free Stock Analysis Report
WHIRLPOOL CORP (WHR): Free Stock Analysis
Report
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