Whirlpool Corporation (WHR) reported a 16% fall in profit (before special items) to $2.11 per share from $2.51 per share (before special items) in the year-ago quarter. However, the company has beaten the Zacks Consensus Estimate by a significant margin of 49 cents per share.
The company’s results were favorably impacted by cost reduction and productivity initiatives, increased monetization of certain tax credits, and higher unit volume. These were offset by lower product price/mix and higher material and oil-related costs.
Revenues in the quarter increased marginally by 3% to $4.40 billion, up from the Zacks Consensus Estimate of $4.21 billion. The adjusted operating profit decreased 23% to $221 million in comparison to $287 million in the previous year.
Performance by Region
Revenues in the North American region increased slightly to $2.3 billion as unit shipments rose 4% in the U.S. industry. However, unit shipments of major appliances dipped 1% during the quarter. The company continues to expect U.S. industry unit shipments to increase between 2% and 3% for the full year 2011.
Adjusted operating profit fell significantly to $52 million from $140 million in the first quarter of 2010. Results were favorably impacted by cost reduction and productivity initiatives and foreign exchange fluctuations, which were more than offset by lower product price/mix and higher material costs.
Revenues in the Europe, Middle East and Africa region inched up 1% to $743 million as industry unit demand during the quarter was flat compared with the prior year. The operating profit fell to $25 million from $27 million due to lower product price/mix and higher material costs, partially offset by cost reduction and productivity initiatives. The company continues to expect industry growth in the region in the range of 2%–4% for the full year 2011.
Revenues in the Latin American region escalated 8% to $1.2 billion. Excluding currency translation, revenues increased about 2%. Operating profit rose to $174 million from $167 million in the prior year due to increased monetization of certain tax credits as well as cost reduction and productivity initiatives. These were partially offset by higher material costs. The company continues to anticipate appliance industry shipments to increase in the range of 5%–10% for the full year 2011.
Revenues in the Asian region rose 8% to $208 million. Excluding the impact of currency, revenues increased approximately 6%. Operating profit was flat at $11 million compared with the prior year. The results were favorably affected by volume and product price/mix, offset by higher material costs during the quarter. The company continues to anticipate industry unit shipments in Asia to increase approximately 6% to 8% for full year 2011.
Whirlpool had cash and cash equivalents of $1.03 billion as of March 31, 2011, down from $1.37 billion as of December 31, 2010. Long-term debt remained unchanged at $2.51 billion as of March 31, 2011 compared with the same as of December 31, 2010. Consequently, long-term debt-to-capitalization ratio reduced to 36% from 37% as of December 31, 2010 due to an increase in shareholders equity.
In the quarter, the company had a cash outflow of $224 million from operating activities compared with an inflow of $71 million in the year-ago period, primarily due to lower accounts payable and lower deferred taxes. Meanwhile, capital expenditures decreased to $115 million from $146 million in the quarter.
Earnings and Cash Flow Guidance
Whirlpool Corporation, a Zacks #3 Rank (Hold) stock, anticipates to record earnings per share of $12.00 to $13.00 for full year 2011. The company expects to generate free cash flow between $400 million and $500 million for the year. This includes approximately $300 million to $350 million of energy tax credits and cash pension contributions of approximately $300 million in the U.S.