Whirlpool predicts sales slump into 2009
by February 9, 2009 7:56 am 101 views
Whirlpool Corp. is predicting that the sales slump from the national housing downturn will continue into 2009.
Higher costs of production and “sharply lower” sales Benton Harbor, Mich.-based Whirlpool Corp. combined to push the company’s 2008 net income to $418 million, down 34.6% from the $640 million in 2007. Total sales for the global appliance maker in 2008 was $18.9 billion, down 2.5% from 2007 sales.
Fourth-quarter net income for Whirlpool was $44 million, a sharp drop from the $187 million posted in the same period of 2007.
Whirlpool’s North America segment — to which the company’s Fort Smith plant belongs — saw fourth-quarter sales of $2.5 billion, down 18% from the prior year. U.S. industry unit shipments of major appliances declined approximately 10%.
The North America region reported an operating loss of $20 million compared to an operating profit of $175 million in the previous year. The company cited significantly lower sales and unit production levels, unfavorable foreign exchange, product recall costs and higher material and oil-related costs for the fourth-quarter troubles.
Based on current economic conditions, the company expects full-year 2009 U.S. industry unit shipments to decline approximately 10 percent from 2008. The downturn in product sales is noted by the company as a key reason it has reduced employment at its Fort Smith plant from about 4,500 in early 2006 to between 1,500-1,000 today. The Whirlpool reduction have resulted in numerous job cuts and plant closures in the region, including the closing of the Jarden Plastics plant in Fort Smith, and the layoff of more than 70 from Fortis Plastics (formerly known as Atlantis Plastics).
The company also said more cost-cutting measures are in the works.
“We expect 2009 economic conditions to be among the most challenging that we have faced,” Jeff M. Fettig, Whirlpool chairman and CEO, said in the earnings statement. “Significant demand declines, volatile cost and currency levels are expected throughout the year. To succeed in this environment we are aggressively taking additional steps, beyond actions previously announced, to further reduce all areas of cost, production capacity, working capital and capital expenditures.”
On Jan. 22, Moody’s Investor Service downgraded the credit rating of Whirlpool Corp. do Baa3. The Baa3 rating often is given during times of economic distress, and suggests that problems may arise within the company’s business model. The rating is one step above a speculative, or junk, rating.
During the fourth quarter, Whirlpool tapped into its $2.2 billion credit line and is working with banks to seek “additional flexibility within its capital structure.”