Whirlpool: "unprecedented levels of material and oil-related cost increases"
-and gold is down.
Increased costs hurt Whirlpool earnings
By JAMES PRICHARD
AP BUSINESS WRITER
GRAND RAPIDS, Mich. -- Whirlpool Corp.'s earnings fell 21.8 percent in the fourth quarter as higher costs for materials and transportation for the appliance manufacturer offset the impact of higher sales. Its shares fell more than 5 percent.
Whirlpool reported Thursday it earned $97 million, or $1.44 per share, in the three-month period that ended Dec. 31, compared with $124 million, or $1.76 per share, for the fourth quarter of 2003.
Analysts surveyed by Thomson First Call had predicted earnings of $1.43 per share.
Sales increased 8.1 percent to $3.63 billion from $3.36 billion in the same period in 2003. Excluding the favorable effects of foreign-currency translations, net sales increased approximately 5 percent.
"During the fourth quarter, we announced that we were taking specific actions to offset unprecedented levels of material and oil-related cost increases," said Jeff M. Fettig, Whirlpool's chairman, president and chief executive officer.
Those increases accelerated during the quarter, he said, and the Benton Harbor-based company estimates that its material costs will increase another 7 percent to 8 percent during 2005.
Greater volume, record levels of productivity, price increases and cost controls helped ease the downward pressure on its operating margin.
Fettig said Whirlpool helped offset costs by implementing global price increases of 5 percent to 10 percent, effective Jan. 1. It had announced the increases in October, citing the rising costs of fuel and steel.
By raising prices, accelerating the rate of new-product introductions and taking other steps, "we believe we're going to be able to successfully manage through this period of significantly higher commodity prices," he said during a teleconference with industry analysts.
During 2005, the company expects its earnings per share to be between $5.90 and $6.10, Fettig said. Analysts were expecting earnings of $5.88 a share for 2005.
Whirlpool executives also said they were investigating the possibility of repatriating foreign earnings.
The American Jobs Creation Act of 2004, which President Bush signed into law on Oct. 22, gives U.S.-based, international companies a one-year window to reduce their tax rates on overseas profits brought back to the United States and reinvested here.
The tax-rate cut would be from as high as 35 percent down to 5.25 percent if a company's management has a plan to use the money for hiring and training workers, making capital investments, research and development, financial stabilization or advertising and marketing.
For all of 2004, Whirlpool earned $406 million, or $5.90 per share, compared with $414 million, or $5.91 per share, a year earlier. Revenue rose to $13.22 billion from $12.18 billion a year earlier. Excluding currency translations, net sales increased approximately 6 percent.
Whirlpool shares fell $3.62, or 5.3 percent, to $64.65 in afternoon trading on the New York Stock Exchange. Its shares have traded in a 52-week range of $54.53 and $76.64.
The company has 68,000 employees and nearly 50 manufacturing and research centers around the world. Its brands include Whirlpool, KitchenAid and Roper.
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On the Net:
Whirlpool Corp.: whirlpoolcorp.com
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