Legal deal pushes Whirlpool to a quarterly loss

Settlement of a longstanding dispute with a Brazilian bank resulted in a second quarter loss of $161 million for Benton Harbor-based Whirlpool Corp.

Whirlpool, which operates a refrigerator manufacturing plant in Fort Smith, paid $522 million during the second quarter to a Brazilian bank to settle a legal fight ongoing for more than 20 years.

However, the global appliance maker saw revenue reach $4.73 billion, up 4.32% over the second quarter of 2010.

But the revenue gains did not come from the company’s North American division. Second-quarter sales in North American totaled $2.4 billion, down 7% from the 2010 quarter. North America unit shipments fell 5%, while U.S. industry unit shipments of major appliances fell 10%.

“Based on the current economic outlook, the company now expects full-year 2011 U.S. industry unit shipments to decrease between 1 percent and 2 percent,” according to Whirlpool’s earnings report. The previous outlook was that shipments would increase as much as 3%.

The reduced consumer demand did result in Whirlpool canceling a line-rate increase in Fort Smith planned for late June. Whirlpool spokeswoman Kristine Vernier has said rumors of significant employment cuts in Fort Smith are not true. She said employment will remain near 1,100 at the Fort Smith plant. The company employed about 4,600 in Fort Smith in 2006.

Sources recently told The City Wire that plant hourly employment may to drop to around 550 in the August-October period. The plant, according to the sources, will refocus on primarily producing the low-end (price range) boxes.

On July 20, Vernier confirmed that Whirlpool is “processing a voluntary layoff of up to 40 people” related to a short-term production run of counter depth appliances that began in June.

“After this, our employment levels will remain at approximately the same levels as prior to the June callback. We have no plans for significant changes in production rates from what we have previously communicated,” Vernier said.

Whirlpool Chairman and CEO Jeff Fettig said the company is preparing for high unemployment, inflation and continued weakness in the global economy.

"We expect global economic volatility to continue in the near term," said Fettig said in the earnings report. "We are rapidly adjusting to a much more challenging global economic environment. Our primary focus is to expand operating margins, which we expect to do throughout the second half of the year.  While demand remains positive globally, we expect to continue to see demand volatility as consumers around the world remain impacted by economic uncertainties and high inflation.”

Whirlpool reaffirmed that its 2011 earnings per share will be in the $12-$13 range, but says the results will likely hit in the low-end of the range.

Whirlpool Corp. is a global manufacturer and marketer of major home appliances, with annual sales of more than $18 billion in 2010, 71,000 employees, and 66 manufacturing and technology research centers around the world.

Shares of Whirlpool (NYSE: WHR), which opened Thursday at $74.40, were down almost 4% in mid-day trading. During the past 52 weeks, the share price has ranged from a $92.28 high to a $71 low.