Whirlpool reports record earnings, says Maytag merger ‘on track’

Whirlpool reports record earnings; says Maytag merger ‘on track’
 
Date February 02, 2006
Section(s) Local News
   
 
By PETER HUSSMANN

Editor

Whirlpool Corp., which is in the process of taking over rival Maytag, reported today a 30 percent increase in fourth quarter earnings.

The nation’s largest appliance manufacturer reported record last quarter earnings of $126 million compared to $97 million for the period the year before. For the year, the Benton Harbor, Mich.-based company reported record full-year net earnings of $422 million compared to $406 million the year before.

Fourth quarter sales increased 9 percent to $4 billion. For the year, net sales increased $1.1 billion to 14.3 billion. Both quarter and annual net sales represented a record for the company.

“Overall, 2005 was a challenging operating environment where we faced all-time high levels of material and oil-related costs,” said Whirlpool CEO Jeff Fettig. “Our global business responded well to this environment and enabled us to deliver a record year of results for our shareholders.”

Fettig said the record numbers were impacted by productivity, cost-based price adjustments, volume growth, tax credits and lower tax rates. Results were negatively impacted by material and oil-related costs, higher restructuring costs, and increased reserves for litigation.

“We are pleased with our 2005 financial performance, as well as the significant progress made to strenghten our company’s competitiveness for the future,” Fettig said.

Fettig said Whirlpool remains “on track” to acquire Maytag as early as this quarter.

“We remain on track with our acquisition plans and continue to expect to close as early as the first quarter of 2006,” he said. “We believe that the combination will create substantial benefits for consumers, trade customers and our shareholders. This transaction will translate into better products, quality and service, as well as other efficiencies that will allow us to offer a more competitive, wider range of products to a much broader consumer base.”

The Antitrust Division of the Department of Justice is currently reviewing the proposed merger. Combining the two companies would create the world’s largest appliance manufacturer, which has raised concerns among some members of the Iowa congressional delegation and a Washington, D.C.-based pro-competitiveness group worried about potential impacts to consumers with the combined companies controlling so much of the North American marketplace, especially in top-load washer production. Iowa congressional members Tom Harkin and Leonard Boswell, both Democrats, have asked the Justice Department to require Whirlpool to spin off Maytag‘s laundry division.

Both Whirlpool and Maytag have previously said that the merger would not close prior to Feb. 27, without federal regulatory approval, although the Justice Department could ask for additional time for review. Maytag shareholders voted in favor of the merger on Dec. 22.

Whirlpool’s record earnings announcement comes the day before Maytag is scheduled to release its fourth quarter and full-year financial report. In the third quarter, Maytag reported an $18.2 million loss.

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