Whirlpool profit slips; cost-cuts raise outlook

Whirlpool 3rd-quarter profit falls 47 percent; lifts full-year profit forecast on cost cuts

AP - In this Sept. 4, 2009 photo, the Whirlpool logo is shown on a clothes washer at P.C. Richard ...

MILWAUKEE (AP) -- Whirlpool Corp., the world's biggest home appliance maker, raised its profit outlook for the year on Friday, saying cost-cutting that has tempered steep sales declines will pay off in the final quarter of the year.

Whirlpool forecasts that economic uncertainty will continue to hold down demand for its big-ticket items in the U.S. and Europe, though Asia and Latin America are seeing improvements as those economies rebound.

That slumping demand, which has been going on for months, took a toll on the company's third quarter, as its profit fell 47 percent. Many shoppers are putting off appliance purchases amid a recession complicated by tight credit and falling housing prices, both of which hurt the market for appliances.

Whirlpool, whose other brands include Maytag and KitchenAid, has cut jobs and closed a factory to deal with lower sales.

The improved outlook and earnings that handily topped expectations led Whirlpool shares to jump $4.38, or 6 percent, to $77.92 in afternoon trading Friday.

The company also boosted its expectations slightly for the U.S. industry this year, although it still expects total industry shipments to decline 10 percent. But that's down from expectations shipments would fall as much as 12 percent.

"We continue to see demand levels in the United States stabilizing, albeit at lower levels," CEO Jeff M. Fettig told investors on a conference call. September was "significantly better" than July or August, Fettig said.

The company could also benefit from federally funded rebates on energy-efficient appliances, a $300 million program that is expected to go into effect later this year or early next.

Standard & Poor's analyst Ken Leon upgraded the stock, saying he expects revenue to rise 4.5 percent in 2010, after falling 11 percent this year. He boosted his price target to $80 from $55.

For the quarter, Whirlpool, based in Benton Harbor, Mich., earned $87 million, or $1.15 per share in the quarter, down from $163 million, or $2.15 per share, a year earlier.

Quarterly results included $43 million, or 50 cents per share, for a settlement with the Brazilian competition commission.

Sales for the quarter dropped 8 percent to $4.5 billion from $4.9 billion. Removing foreign currency fluctuations, revenue dipped about 3 percent.

Analysts polled by Thomson Reuters expected profit of 77 cents per share on revenue of $4.28 billion. Analysts' estimates generally exclude one-time items.

Revenue fell 9 percent in North America as U.S. industry unit shipments of major appliances declined 6 percent.

In Europe, revenue tumbled 17 percent, with overall industry unit demand down about 10 percent. Without the effects of foreign currency, revenue fell 11 percent. A strong U.S. dollar has been weighing on foreign sales, since those sales convert back to fewer dollars. But the dollar's value is now dropping, which could help foreign revenue in future quarters.

The Latin American unit fared better, with sales up on increased Brazilian appliance demand. Sales also improved in Asia, with revenue up 18 percent from the prior year -- or 26 percent without the effect of currency. Fettig said business in India was particularly strong.

Whirlpool has trimmed jobs and shuttered a refrigerator factory in Evansville, Ind. In August the company disclosed in a regulatory filing that it would face $51 million in costs related to the plant's closing and 1,100 job cuts.

But the company has said it might call back 150 employees who were laid off at its Fort Smith, Ark. refrigerator factory.

Whirlpool now expects earnings of about $4.25 per share, up from a prior outlook for profit of $3.50 to $4 per share.

Analysts expect earnings of $4.05 per share for the year.

AP Business Writer Michelle Chapman contributed to this report from New York.