Whirlpool said on Friday said it would raise prices of its appliances in Britain and Russia to counter deteriorating currencies that are hurting the company’s profits.
If you read this site regularly you will already know that there has been rumblings about price hikes for a week or so now after the Brexit result had a bit of time to be digested by appliance makers. Well, it increasingly seems that price hikes for UK customers are almost inevitable after we voted to leave the EU.
Whirlpool told the Wall Street Journal that the UK vote last month to leave the EU accelerated a decline in the British pound under way before the vote, which we know all too well from media coverage of it.
What people may not be aware of is that most of the appliances Whirlpool sells in the U.K. are imported from factories in Eurozone countries, carrying with them euro-denominated production costs. Or from outside the EU but the transactions are all don win EU countries where Whirlpool and many other manufacturers are based and operate in so, they transact in Euros.
“A 1% change in value of the pound is the same as 1% change in cost,” Whirlpool Chief Executive Jeff Fettig said in an interview.
Interestingly out of this piece was the nugget that even before the Brexit referendum, Whirlpool had planned to raise prices in Britain on 1st July anyway.
Thing is that with the ongoing uncertainty over exchange rates and all that financial malarky Whirlpool is the first one we’ve heard of to openly say it would consider additional price increases this year to offset further weakness in the pound.
It will not be the only one, we can almost guarantee it.
Whirlpool faces the same sort of thing in Russia where difficult economic conditions have driven down the value of the ruble against the Euro and U.S. dollar.
However, Whirlpool does have some manufacturing plants in Russia that will help the company offset some of the currency effects to a degree.
It is reported from Friday that Whirlpool saw a 3% drop in second-quarter sales from Europe, the Middle East and Africa and a 9% decrease in operating profit for the combined region because of currency swings. These markets when combined account for more than a quarter of the company’s total annual sales so, they are paying attention to it big time.
It’s not the only areas where Whirlpool and others have come under increased pressure due to currency rates though with Jeff Fettig saying of them that, <currency rates have> “never been as negative as they have been in the last 12 months,”.
If people thought nothing would change and prices would all just bible along as they have been, mhm, no. Think again.
