Whirlpool reports 37 percent increase in quarter earnings

Whirlpool reports 37 percent increase in quarter earnings
Date April 25, 2006
Section(s) Local News
By Associated Press

and Daily News Staff

BENTON HARBOR, Mich. — Whirlpool Corp., which completed an acquisition of rival appliance maker Maytag Corp. on the final day of its first quarter, said quarterly earnings rose 37 percent with help from strong trade and consumer demand for its products.

Whirlpool beat Wall Street’s expectations by reporting first-quarter earnings of $118 million, or $1.70 per share, compared with $86 million, or $1.26 per share, in the same period last year.

A consensus of analysts surveyed by Thomson Financial had predicted earnings per share of $1.52.

Sales rose 10 percent to $3.5 billion, from $3.2 billion. Whirlpoosaid in a written statement that the results reflect the company’s 19th consecutive quarter of year-over-year sales improvement.

The results do not include Maytag‘s first quarter results. However, during a conference call today Whirlpool said Maytag saw 8 percent growth in its core business platforms during the first quarter. Whirlpool would not comment on Maytag‘s floor care and commercial product lines, only saying that they continued to evaluate those businesses, including their possible sale.

In announcing the record first quarter results, Whirlpool said expenses of $13 million related to the takeover are included in the first-quarter operating profit calculation. Maytag‘s results will be included in Whirlpool’s second-quarter statement of operations.

Jeff Fettig, Whirlpool’s chairman and chief executive officer, said during the conference call that additional information concerning the ongoing integration of Maytag into Whirlpool will be announced on May 23.

“The acquisition is progressing well, according to plan,” he said. “On May 23, we will go into more detail and give guidance based on the combined operations.”

While skirting most questions pertaining to the Maytag buyout, Whirlpool officials said they have had positive reaction from retailers who feel Whirlpool is better positioned to improve Maytag product line innovations and improve its cost structure. Whirlpool also will be able to reach a broader base of consumers with the acquisition.

Dave Swift, president of Whirlpool’s North American operations, said the company will release an entirely new laundry line in the second quarter, the result of Whirlpool’s largest ever product investment initiative. Sixty percent of the products that will be sold at the end of this year did not exist at the end of 2005, he said.

In responding to a question in regard to Maytag‘s involvement in that launch, Whirlpool officials said the launch plan was in the works prior to the company’s decision to acquire Maytag.

“Industry demand remains positive and we continue to maintain our outlook on the strength of the economic environment despite volatile commodity prices,” Fettig said.

“Our plans, which include accelerating new product innovation to the marketplace, driving total cost productivity, controlling spending by reducing overhead and infrastructure while increasing investments in consumer activities and managing our overall mix of business, remain on track,” he said.

“The process to integrate Maytag and Whirlpool businesses is proceeding as planned and we look forward to providing additional information regarding the merger, as well as updating our guidance on May 23, 2006,” Fettig said.

Record unit shipments, sales growth and a positive product mix combined with productivity improvements to offset acquisition related expenses, higher commodity prices, higher new-product introduction costs and increased restructuring costs.

Results also benefited from a reduced effective tax rate, Whirlpool said.

Benton Harbor-based Whirlpool completed its acquisition of Newton, Iowa-based Maytag on March 31. The value of the deal was about $1.79 billion, or $2.6 billion including the assumption of Maytag debt.

ApplianceMagazine.com reported Friday that Whirlpool is among bidders for South Korean appliance and electronic’s maker Daewoo. No discussion of that report was held during the conference call.

In early trading, Whirlpool stock was up more than $2 on the news of its first quarter earnings.

Gov. Tom Vilsack said Monday he plans to convene a meeting of Whirlpool officials and representatives from Newton, Amana and North Liberty Thursday afternoon.

Maytag has more than 4,000 workers in the state at its corporate headquarters and laundry factory in Newton, a refrigerator factory in Amana and a warehouse in North Liberty.

State and local officials had been meeting with Whirlpool even before the deal was finalized to make the case for keeping jobs in Iowa.

Iowa Department of Economic Development Deputy Director Tina Hoffman said tax credits, job training and grants are possible incentives that could be offered to Whirlpool.

“We have had some conversations with Whirlpool since the closing of the acquisition and in addition to talking about the business climate we have here in the state and the productivity of our workers, certainly the tools that are available for job attraction and retention have been part of that conversation,” she said.

Daniel F. Verakis, a Whirlpool spokesman said representatives of the company’s government affairs staff are expected to travel to Iowa for the meetings.

On April 12, the Iowa Senate passed a resolution, in which lawmakers welcomed Whirlpool to the state. The resolution said the state “eagerly stands ready to assist the Whirlpool Corporation in any way feasible to ensure its success in the global market with operations in Iowa.”


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