Whirlpool Sees Strong U.S. Market

By James R. Hagerty 

Whirlpool Corp. expects a strong U.S. market to make up for weakness in Brazil, Russia and China this year.

The Benton Harbor, Mich.-based maker of home appliances said Friday that profit more than doubled in the fourth quarter as margins improved. It forecast earnings per share would grow in a range of about 14% to 22% this year.

Emerging markets generally "will continue to be weak or decline," said Jeff Fettig, chief executive, but the U.S. housing market recovery still has a long way to go and will continue to spur purchases of refrigerators, washers and other appliances.

He predicted that the dollar would remain strong, reducing the value of Whirlpool's overseas results. As a result, Mr. Fettig said, the company trimmed its long-term sales goal to between $23 billion and $24 billion in 2018, compared with $20.9 billion in 2015. Previously, the goal for 2018 was $26 billion to $28 billion.

Whirlpool expanded its presence outside the U.S. in 2014 by acquiring Italy's Indesit Co. and 51% of Hefei Rongshida Sanyo Electric Co. of China. Even so, Whirlpool still relies heavily on its home market. North American operating profit of $340 million in the latest quarter compared with just $88 million in Europe, $58 million in Latin America and $5 million in Asia.

Whirlpool predicts industrywide unit shipments will grow 5% in North America this year, while Brazil falls 10%, Asia stays level and Europe is flat to up 2% The company expects 5% industry growth in India this year, but a decline of 2% to 3% in China, where consumer confidence and housing are weak.

The North American market could grow more competitive. South Korea's LG Electronics Inc. and Samsung Electronics Co. have been gaining market share from Whirlpool in recent years. In December, Whirlpool asked the U.S. government to impose duties on washing machines made in China by LG and Samsung, a case pending before U.S. trade authorities.

Two weeks ago, Haier Group of China agreed to pay $5.4 billion for General Electric Co.'s appliance business. Haier opened a home-appliances plant 15 years ago in Camden, S.C., but so far has gained only a tiny share of the U.S. market. The GE acquisition would make it a leading U.S. supplier.

Haier has been very successful in China, Mr. Fettig said, and the GE business offers "an attractive opportunity" to expand in the U.S.

Whirlpool forecast capital spending of $700 million to $750 million in 2016, up from last year's $689 million.

Whirlpool said the latest quarter benefited from acquisitions, cost cutting, higher prices and more sales of premium appliances. Profit totaled $180 million, or $2.28 per share, up from $81 million, or $1.02 per share, a year earlier. Sales totaled $5.56 billion, down 7.4%. Excluding currency effects, sales were up 4%. Analysts expected earnings of $3.91 per share and sales of $5.74 billion, according to Thomson Reuters. Operating profit margins widened to 6.9% from 4.7%.

Whirlpool's brands include KitchenAid, Consul, Maytag, Brastemp, Amana, Bauknecht and Jenn-Air.

Write to James R. Hagerty at [e-mail]

(END) Dow Jones Newswires

January 29, 2016 11:43 ET (16:43 GMT)

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