Whirlpool Revamps European Dryer Units, Plans 500 Job Cuts

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Whirlpool CorporationWHR has put forward a proposal seeking the reorganization of its dryer manufacturing operations in the Europe, Middle East and Africa (EMEA) region, right ahead of its scheduled fourth-quarter 2016 earnings release on Jan 26. Analysts speculate that this move comes as a reaction to Britain's vote to exit the European Union ("Brexit") on Jun 23, 2016.

At that time, Whirlpool stated that it will keep a close check on the effects of Brexit and swiftly take necessary actions to counter any adverse impact on its EMEA operations. Further, the company emphasized on the importance of its U.K. business, which constituted nearly 5% of its total revenue in fiscal 2015.

Coming back to the restructuring of its dryer business in Europe, the Michigan-based leading global appliance maker revealed that its Yate facility in U.K., will now manufacture dryers exclusively for its U.K. customers as part of changes at the unit. Previously, nearly one-third of the appliances produced at the facility were exported to other parts of Europe.

Further, Whirlpool intends to cease production at its facility in Amiens, France in 2018. Majority of the dryers produced at this facility is sold in continental Europe, while a small portion is exported to the U.K. Additionally, the company expects to focus on producing dryers for its non-U.K. customers in Lodz, Poland.

Whirlpool expects these actions, which will be eventually completed in 2018, to affect about 500 employees. However, the company did not disclose whether these positions will be eliminated or absorbed in other locations. Furthermore, these initiatives are expected to attract costs of about $88 million, including $65 million of employee-related costs, $12 million asset impairment charges and $11 million of other costs. Of these, the company expects $76 million to be accounted in future cash expenditures.

Whirlpool had earlier revealed that it expects restructuring charges of up to $200 million in fiscal 2016. The aforementioned initiatives are expected to incur $20 million costs in 2016, which falls within the company's previous forecast.

Though the shares of Whirlpool did not react much to the news, we commend this Zacks Rank #2 (Buy) company's move to retain production in the U.K. to serve its customers in the country. However, the company's shares have been witnessing an uptrend in the last one year. Whirlpool's stocks have grown nearly 40.7% in the past one year, outperforming the Zacks categorized Consumer Discretionary sector's growth of 16.9%.

Other Stocks to Consider

Another favorably placed stock in the same industry is AB Electrolux ELUXY , sporting Zacks Rank #1 (Strong Buy). Some other well-ranked stocks in the Consumer Discretionary sector include Central Garden & Pet Company CENT and Francesca's Holdings Corporation FRAN , both flaunting a Zacks Rank #1. You can see the complete list of today's Zacks #1 Rank stocks here .

Electrolux, with a long-term earnings growth rate of 4.1%, has surged nearly 14.5% in the last three months.

Central Garden, with a long-term earnings growth rate of 10%, has recorded a whopping growth of 167.1% in the last one year.

Francesca's Holdings has jumped 42.5% in the last six months. The stock has a long-term earnings growth rate of 13.8%.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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