Whirlpool Corp. (WHR) recently filed an antidumping petition with the U.S. Department of Commerce and the International Trade Commission against the South Korean government’s subsidies on home appliances, particularly refrigerators.
According to the company, the Korean government has invoked an unfair trade practice by giving unjust subsidies to Samsung Electronics Co. and LG Electronics Inc. over the past several years.
The subsidy policy has led the two South Korean appliance makers to sell their products in the U.S. at a price much lower than their fair value. Consequently, American appliance makers, mainly Whirlpool have been badly affected in the face of intense competition from these imports.
The average retail price of one of the company’s 25-cubic-foot stainless-steel refrigerator models dropped nearly 40% to $1,226 in last year’s fourth quarter compared with prices in early 2008.
For Whirlpool’s manufacturing facility at Amana, which produces bottom-mount refrigerators, the situation is worse than the others as the bottom-mount refrigerators are the most severely affected among all other products and models. Bottom-mount refrigerators generally are priced much higher than models with the freezer on top. But similar Korean models are comparatively much cheaper.
However, with increased competition in the domestic market due to unfavorable trade consequences, Whirlpool has strategically targeted the emerging economies, which have huge potential going forward. The emerging economies of Asia and Latin America, particularly China, India and Brazil, are expected to see strong demand for appliances in the near future.
In the last financial year, the company showed notable improvements in Latin America and Asia, despite higher material costs and unfavorable foreign currency fluctuations. Shipments to Latin America climbed 18% while those to Asia jumped 9%.
As a result, Whirlpool exhibited strong performance during fiscal 2010. Net profit almost doubled to $171 million or $2.19 per share from $95 million or $1.24 per share in the prior-year quarter. For full year 2010 net profit increased significantly to $7.97 per share from $4.34 per share in 2009. Sales for the fourth quarter were up 4% year over year to $5 billion while sales for the full year rose 7% to $18.4 billion. The company expects a higher shipment growth of 5%–10% in Brazil and 6%–8% in Asia.
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