Whirlpool Corporation announced Friday third-quarter net earnings of $177 million, or $2.27 per diluted share, compared to net earnings of $79 million, or $1.02 per diluted share reported during the same period last year.
On an adjusted basis, excluding non-operating charges, diluted earnings per share(1) totaled $2.35 compared to $2.22 in the prior year. Sales in 2011 were $4.6 billion, compared to $4.5 billion reported in the third quarter of 2010, a 2 percent increase driven by favorable currency.
Third-quarter operating profit totaled $136 million compared with $234 million in the prior year. Weaker global demand and higher raw material and oil-related costs during the quarter offset the benefits of ongoing productivity, cost reduction initiatives and previously announced price increases.
“During the quarter, we experienced weaker than expected global industry demand and elevated material costs,” said Jeff M. Fettig, Whirlpool Corporation chairman and chief executive officer. “Consumers continue to show strong preference for our unmatched global brand portfolio and new product innovations, and we are beginning to see the benefits from previously announced price increases. However, our results were negatively impacted by recessionary demand levels in developed countries, a slowdown in emerging markets and high levels of inflation in material costs.
“As we previously indicated, in a period of uncertain economic growth and consumer demand, we would be prepared to take the necessary actions in order to expand our operating margins and improve our earnings. Given the weakening global economic environment, we are today announcing aggressive plans that will result in substantial cost and capacity reductions. The plans are the result of a comprehensive global review of our operations, products and manufacturing facilities.”
The company’s cost and capacity reduction plans include a workforce reduction of more than 5,000 positions primarily within North America and Europe (approximately a 10% workforce reduction in those regions). These plans include:
- Reduction of approximately 1,200 salaried positions.
- Closure of the refrigeration manufacturing facility in Fort Smith, Ark. by mid-2012. Production from Fort Smith will be consolidated into current North American sites to leverage existing resources and capacity.
- Relocation of dishwasher production from Neunkirchen, Germany to Poland in January 2012.
- Additional organizational efficiency actions in North America and Europe.
- Overall capacity is expected to be reduced by approximately 6 million units based on Friday’s announcement and other actions.
These actions are expected to result in $400 million in annual cost savings by the end of 2013. The combination of these plans with announced price increases are expected to accelerate margin growth beginning in 2012. Restructuring expenses totaling approximately $500 million will be incurred over the period beginning in the fourth quarter of 2011 through 2013. The company now anticipates recording restructuring expenses of approximately $160 million in 2011 compared with its previous estimate of $75 million to $100 million.
Article Courtesy of WOIO 19 Action News