Whirlpool have reported a lower than expected first quarter earnings as cost and capacity reductions were offset by soft demand in emerging markets and unfavourable currency exchange rates, the company said.
In Latin America, weak demand in Brazil and the negative impact of currency exchange pulled sales down to $705 million, from about $900 million a year ago, Whirlpool said.
“There is some concern about European market loss,” Gabelli analyst Alvaro Lacayo said. Overall industry shipments were down about 1% in Europe, but Whirlpool saw slightly steeper losses.
Whirlpool’s COO Marc Bitzer pointed to Russia and the United Kingdom as specific drags on Whirlpool’s European sales in a call to analysts.
Whether this is as part of a direct impact of the recent tumble dryer safety notice debacle we do not know but we expect that this didn’t help but it has reportedly impacted sales. Whilst this is being viewed as a temporary issue, Which? reported recently that the modification program being undertaken on these tumble dryers could take over three years to complete.
For Russia, sales were soft in the first quarter, and the volatile market will be difficult to predict, Bitzer said.
Sales in the USA, Whirlpool’s biggest market, rose about 4% to $2.4 billion. Whirlpool expects to continue to regain market share in the USA throughout the second quarter, Bitzer said.
Whirlpool reported net earnings of $150 million, or $1.92 per share, down from $191 million, or $2.38 per share, a year earlier.
Whirlpool said first-quarter ongoing business earnings rose to $2.63 per share from $2.14 in the same period last year. Analysts had expected $2.68.
The company said it still expects full-year 2016 ongoing business earnings per share at $14 to $14.75. Ongoing business earnings per share exclude special items such as restructuring charges or other one-time fees that do not reflect the company’s ongoing operations.
Net sales fell to $4.6 billion from $4.8 billion a year earlier.
Whirlpool said it expects the 2016 full year industry shipments in the USA to rise by 5% to 6%, an increased range from its previous forecast of 5%.
Brazil industry shipments are forecast to fall 10 percent, Europe is seen flat to up 2 percent and Asia flat, all with no change from previous forecasts.
Whirlpool shares were down about 3.9% to $178.75.
