Whirlpool Beats 2nd-Quarter Earnings & Revenue Expectations
Whirlpool Corp. (NYSE:WHR) released its second-quarter results on July 22 after the market closed. The company beat Wall Street's estimates for earnings and revenue. Results were, however, down on a year-over-year basis.
The Benton Harbor, Michigan-based company posted diluted earnings per share of $2.15, which was lower than EPS of $4.01 recorded in the year-ago period. Revenue plunged from $5.2 billion in the prior-year quarter to $4 billion. Analysts had predicted EPS of 96 cents on $3.62 billion in revenue.
Segment performance
At Whirlpool North America, revenue declined 12.5% to $2.5 billion in the reported quarter. Operating profit came in at $316 million, down from $353 million reported in the year-ago quarter. Ebit margins surged 20 basis points to 12.6%, driven by cost reduction initiatives as well as reduced marketing investments, which helped in negating poor demand.
Sales in the Latin America division dipped roughly 51% on a year-over-year basis to $434 million. Sales of the company's Embraco compressor business hurt the segment's quarterly sales. The company registered an operating profit of $11 million, down from $56 million reported in the same quarter last year.
Sales in Europe, the Middle East and Africa (EMEA) dropped a combined 19% to $836 million (17% barring currency translations). The company posted an operating loss of $66 million, which was lower than the operating loss of $16 million reported in the previous-year quarter.
At Whirlpool Asia, sales plummeted 37.1% to $271 million. Operating loss came in at $18 million. The company did benefit from strong cost discipline during the quarter, but it was offset by negative demand across the region.
Response to Covid-19
The company's Covid-19 response plan, which aims at generating cost savings of more than $500 million, has stayed on track. In the second quarter, the company trimmed costs to the extent of $100 million, freeing up as much as $124 million in free cash flow. At quarter's end, the company's balance of total cash and available credit stood at a combined $5 billion.
Chief Financial Officer Jim Peters commented the following:
"In the quarter, we delivered solid cost takeout globally and strong cash flow improvement through disciplined working capital management. The actions we took earlier this year to sustain our margins and protect our liquidity strengthened our ability to succeed through the ongoing COVID-19 pandemic and have prepared us to withstand current economic uncertainty."
Guidance
For 2020, the appliance maker projects revenue to decline between 10% and 15%. This is lower than its prior forecast of 13% to 18%.
Disclosure: I do not hold any positions in the stocks mentioned.
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