Whirlpool Corporation (WHR) reported a profit (before special items) of $2.22 per share that was in line with the Zacks Consensus Estimate. The profit improved from $1.67 per share (before special items) in the year-ago quarter.
Revenues in the quarter increased marginally by $22 million to $4.52 billion, meeting the Zacks Consensus Estimate. The adjusted operating profit was $234 million in comparison to $193 million in the previous year.
The company’s results were driven favorably by cost reduction and efforts to enhance productivity, as well as increased monetization of certain tax credits. However, the benefits were offset partially by higher material costs and unfavorable product price/mix.
Performance by Region
Revenues in the North American region slid 3% to $2.4 billion as unit shipments of major appliances fell 3% in the U.S. industry. The adjusted operating profit declined to $114 million from $147 million last year due to unfavorable product price/mix and higher material costs. For full year 2010, the company expects unit shipments in the U.S. industry to increase 3%, down from the prior outlook of an increase of 5%.
Revenues in the European region dipped 8% to $827 million. However, sales were flat compared with the prior year, excluding the impact of currency fluctuations. Overall unit demand in the industry rose 3% to 4% from the prior year.
Operating profit in the region improved to $26 million from $14 million a year ago led by cost reduction actions and efforts to enhance productivity. For full year 2010, the company anticipates unit shipments in the European industry to grow by 1%–3% compared to the prior outlook of flat shipments.
Revenues in the Latin American region grew 13% to $1.1 billion. Excluding currency translation effects, sales increased about 9% during the quarter. Operating profit rose to $143 million from $93 million in the previous year, driven by increased monetization of certain tax credits, cost reductions actions and productivity initiatives, offset partially by higher material costs and unfavorable price/mix. For full year 2010, the company expects Brazilian appliance shipments to increase 10% on a year-over-year basis.
Revenues in the Asian region escalated 21% to $195 million, while it increased 16% excluding impact of fluctuations in currency. Operating profit was flat at $5 million compared with the year-ago level as a rise in unit volume were offset by higher material and oil-related costs. For full year 2010, the company anticipates unit shipments in the Asian industry to increase 8%–10%, up from the prior outlook of an increase of 5%–8%.
Financial Position
Whirlpool had cash and cash equivalents of $901 million as of September 30, 2010, down from $1.38 billion as of December 31, 2009. Long-term debt stood at $2.51 billion as of September 30, 2010 compared with $2.88 billion as of December 31, 2009. Consequently, long-term debt-capitalization ratio reduced to 38% from 44% a year ago.
Despite an improvement in profit, cash flow from operating activities deteriorated to $377 million in the first nine months of 2010 from $652 million in the year-ago period, primarily due to higher inventories. Meanwhile, capital expenditures increased marginally by $39 million to $387 million in the above period.
Outlook
Whirlpool Corporation, a Zacks #4 Rank (Sell) stock, revised its expectations for earnings per share for the full year 2010. Earnings per share are now expected in the range of $9.56 per share–$10.06 per share, up from $9.00 per share–$9.50 per share predicted earlier.
The company reiterated its forecast to generate free cash flow between $550 million and $650 million for the full year. This includes expected cash flow of $1.115 billion–$1.225 billion from operating activities and anticipated capital expenditures of $575 million–$625 million for the same period.
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