) reported adjusted net income of $1.80 per share in the third
quarter of 2012, significantly higher than 29 cents in the same
period last year and surpassing the Zacks Consensus Estimate of
$1.60. However, reported profits went down 58% to $74.0 million
or 94 cents per share in the quarter from $177.0 million or $2.27
in the year-ago period.
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WHIRLPOOL CORP (WHR): Free Stock Analysis
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Revenues in the quarter fell 2.8% year over year to $4.50
billion, missing the Zacks Consensus Estimate of $4.58 billion.
Despite a strong product price/mix, foreign currency translation
and lower monetization of Brazilian (BEFIEX) tax credits weighed
on the top line.
Gross profit improved 22.9% year over year to $704.0 million from
$573.0 million a year ago. Gross margin was 15.7% compared with
12.4% year ago. Adjusted operating profit more than doubled to
$263.0 million from $110.0 million in the year ago quarter.
Revenues from North America increased 2% to $2.4 billion, despite
a 5% drop in shipments. Operating profit jumped more than
threefold to $227.0 million in the quarter from $62.0 million
last year. The year-over-year growth in operating profit was due
to product price and mix along with cost and capacity reduction
measures, which offset the adverse impact of higher raw material
However, Whirlpool lowered its U.S. industry unit shipments
growth forecast for the year due to unfavorable economic
conditions. The company now expects shipments to be either flat
or down 2%.
Revenues from Latin America were flat at $1.2 billion on a
year-over-year basis. However, excluding the effects of currency
translation and tax credits, revenues grew 21%. Unit shipments
went up 15% in the quarter. Adjusted operating income increased
23.5% to $105.0 million from $85.0 million in the prior year,
driven by a favorable product price/mix.
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 7%-10% this year against the earlier expectation of
Revenues from Europe, Middle East and Africa dipped 19.6% to
$703.0 million in the quarter as shipments fell 9%. However,
excluding the effects of currency translation, the decline in
revenues was much less at 10%. The region recorded operating loss
of $35.0 million compared with $12.0 million in the prior year.
Whirlpool expects industry unit shipments in the region to
decline in the range of 2%-3% in 2012.
Revenues from Asia went down 6.5% to $201 million from $215
million last year. However, excluding the negative impact of
currency translation, revenues increased 2%. Shipments decreased
1% in the region. Meanwhile, operating income went up 75% to $7.0
million from $4.0 million in the year ago quarter. The company
expects industry shipments in the region to decline 5%-7% in
Whirlpool had cash and cash equivalents of $518.0 million as of
September 30, 2012 compared with $1.1 billion as of December 31,
2011. Long-term debt was $1.9 billion as of September 30, 2012
compared with $2.1 billion as of December 31, 2011.
The company used cash flow of $161 million from operations in the
first nine months of 2012 compared with $342 million in the same
period last year. Meanwhile, capital expenditures decreased to
$276 million from $417 million in the first nine months of 2011.
Whirlpool raised its free cash flow guidance to $125 million-$175
million for 2012, from the previous guidance of $100 million-$150
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 $6.90 to $7.10, up from the previous guidance of $6.50
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 #2 Rank, reflecting a
short-term (1 to 3 months) Buy rating and we have a long-term
(more than 6 months) Neutral recommendation on the stock.