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Whirlpool Posts Mixed 4th-Quarter Results

Whirlpool Corp. (NYSE:WHR) released its fourth-quarter results on Jan. 27 after market closed. The company beat Wall Street's estimates for earnings courtesy of price hikes on some appliances as well as a lower raw material inflation. Revenue, however, missed expectations on account of low sales of appliances in North America and China.

By the numbers


The Benton Harbor, Michigan-based company posted diluted earnings per share of $4.91, which exceeded earnings of $4.75 recorded in the year-ago period. Revenue plunged from $5.7 billion in the prior-year quarter to $5.4 billion. Analysts had predicted earnings of $4.27 on $5.52 billion in revenue.

In a statement, Whirlpool's chairman and CEO Marc Bitzer said:


"The underlying drivers of our global business are favorable, including demand for our innovative products and a moderation of inflationary cost pressures. We exited the year with solid momentum and are confident in our guidance for 2020 and our ability to execute on our long-term strategy."



Region performance

At Whirlpool North America, revenue declined a meagre 0.3% to $3.1 billion in the reported quarter. Operating profit came in at $410 million, up from $376 million reported in the year-ago quarter. During the quarter, the company experienced favorable product mix that was only partly offset by mounting costs coupled with lower volumes.

Sales in the Latin America division dipped 21% on a year-over-year basis to $782 million. Sale of the company's Embraco compressor business hurt the segment's quarterly sales. The company registered an operating profit of $42 million, down from $45 million reported in the same quarter last year (operating profit of $17 million was associated with the Embraco compressor business in 2018's Q4 ).

Sales in Europe, the Middle East and Africa (EMEA) dropped a combined 5.5% to $1.2 billion (4.2%, barring currency translations). The company posted an operating profit of $11 million, which was more than the operating loss of $15 million reported in the previous-year quarter.

At Whirlpool Asia, sales plummeted 4.3% to $356 million . Operating profit came in at $2 million. The company benefited from cost reduction initiatives and lower raw material inflation during the quarter.

Impact of trade war

In 2019, Whirlpool experienced the adverse impact of the U.S.-China trade tension. The unending trade dispute between the world's two largest economies increased the overall cost of business for the company. The appliance maker was forced to lift product prices, which impacted the volume growth.

Financial forecast

For 2020, the appliance maker projects adjusted earnings to be between $16 and $17 per share. Bitzer said the company is simplifying its operations in 2020, which would further help its bottom line move up.

Disclosure: I do not hold any positions in the stocks mentioned.

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This article first appeared on GuruFocus.