Whirlpool loses money in 2Q due to settlement

[July 21, 2011]  BENTON HARBOR, Mich. (AP) -- Whirlpool reported a second-quarter loss Thursday, largely due to the settlement of a collection dispute, but adjusted results topped Wall Street's expectations.

Shares dipped 3 percent in premarket trading, however, after the world's biggest appliance company said that it now expects full-year earnings to come in at the low end of its previously reported guidance.

The sluggish economic recovery in the U.S. and a terrible housing market have taken a toll. Sales fell in North America, with U.S. unit shipments of major appliances declining about 10 percent.

Whirlpool lost $161 million, or $2.10 per share for the three months ended June 30. That compares with a profit of $205 million, or $2.64 per share, a year ago.

Whirlpool announced in June that its Brazilian subsidiary would pay $603 million to Brazilian bank Banco Safra S.A. to settle a legal dispute that had spanned two decades.

Excluding about $3.78 per share related to the settlement and $1.08 per share for increased accruals tied to developments in antitrust matters related to its Embraco subsidiary, adjusted earnings were $2.76 per share.

That surpassed the $2.73 per share that analysts surveyed by FactSet predicted.

Quarterly revenue climbed 4 percent to $4.73 billion thanks to favorable currency trends, but that is still just shy of Wall Street expectations. Sales rose in Latin America, Europe, the Middle East and Africa, but declined in Asia due to slowing demand in India.

Whirlpool, whose other brands include Maytag and Kitchenaid, said global shipments rose from the prior year, but rising material and oil-related costs, as well as pricing pressure, hampered performance.

Prohibitive costs and the dour global economy are affecting the entire appliance industry, not just Whirlpool, based in Benton Harbor, Mich. Swedish competitor Electrolux AB reported on Tuesday that its second-quarter profit was nearly halved due to weaker demand in key markets and higher raw material costs.

Whirlpool Corp. has struggled to offset rising prices because U.S. consumers are hurting. Making things even more tricky, rivals are nipping at the industry giant with promotions of their own, so it is difficult for Whirlpool to establish the right prices.

Chairman and CEO Jeff Fettig said that price increases in some countries should lead to a stronger performance during the second half of the year. Yet the company now says full-year earnings will probably be at the low end of its $12 to $13 per share range. The guidance excludes charges related to the Brazilian settlement and Embraco antitrust matters.

Analysts forecast full-year earnings of $11.82 per share.

Whirlpool's stock fell $2.14, or 2.8 percent, to $73.50 before the market open.

[Associated Press]

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