Weak International Sales Dent Appliance Maker’s Results
WhirlpoolCorp. , hurt by falling sales outside the U.S., reported a 9.6% drop in profit for the second quarter and reduced its forecast for the full year.
The Benton Harbor, Mich.-based maker of refrigerators, washers and other home appliances blamed lower unit sales, rising material costs and higher spending on marketing and new products.
The U.S. market is benefiting from a gradual recovery of housing construction, spurring sales of appliances, but South Korean rivals continue to take market share away from the more-established brands. Data from Stevenson Co.’s TraQline service show LG Electronics Inc. ‘s share of the U.S. market in dollar terms climbed to 12.7% in the 12 months ended June 30 from 11.1% in the prior 12 months. Samsung Electronics Co. rose to 10.9% from 9.9%. Whirlpool declined to 30.1% from 30.7%, General Electric Co. to 15.6% from 16.5% and Electrolux AB to 8.4% from 9.4%.
While trying to fend off Korean brands at home, Whirlpool is seeking to expand in Europe and Asia through acquisitions. This month Whirlpool agreed to pay €758 million ($1.02 billion) for a 67% stake in Indesit Co. , an Italian company that sells appliances under its name and the Hotpoint and Scholtes brands. The purchase, a step toward full control, would roughly double Whirlpool’s size in Europe. In China, Whirlpool agreed last year to buy 51% of a small appliance maker, Hefei Rongshida Sanyo Electric Co., for the equivalent of $552 million. Both acquisitions are subject to regulatory approval.
Profit in the second quarter totaled $179 million, or $2.25 per share, down from $198 million, or $2.44 per share, a year earlier. The company said earnings from ongoing business, excluding restructuring costs and other items, were $2.62 per share, up from $2.37 per share. Wall Street had expected ongoing earnings of about $2.86 per share in the latest quarter, according to FactSet.
Sales slipped 1.4% to $4.68 billion. Excluding the effects of currency translations and Brazilian tax credits, sales were up about 1%, Whirlpool said. Excluding currency effects and those tax credits, sales rose 4% in North America in the second quarter but declined 9% in Asia, 4% in Latin America and 3% in Europe, the Middle East and Africa.
Sales in Brazil, one of Whirlpool’s biggest markets, were hurt by an economic slowdown and the World Cup, which left Brazilians with less time for shopping.
Whirlpool said it now expects earnings of between $10.30 and $10.80 per share for the full year, down from an earlier forecast of $11.05 to $11.55. It cited costs related to the pending acquisitions in China and Europe. For 2013, Whirlpool reported earnings of $10.24 per share.
Whirlpool brands include Maytag, KitchenAid, Jenn-Air and Amana.
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