Whirlpool Prepares for Poor 2009 as 4Q08 Earnings Fall 76 Percent
Whirlpool Corporation (Benton Harbor, MI), a global manufacturer of domestic appliances, took quite a blow as the company reported fourth quarter 2008 net earnings fell 76 percent from the same period in the prior year. According to Industrial Info Resources (Sugar Land, TX), the company pointed to decreased product demand, unfavorable currency exchange and high materials cost as contributing to the decline in earnings.
"During the quarter, we saw a steep drop in global unit demand, which made for a very challenging sales and production environment," said Chairman and CEO Jeff M. Fettig at a conference call regarding the earnings. "This was primarily due to accelerated declines in our North American and European business during the quarter. In response to these demand levels, we took aggressive measures to reduce our production rates to insure inventories did not get out of line."
These measures include the closure of five plants and the reduction of approximately 5,000 jobs by the end of 2009. "These actions are in place and are now beginning to deliver strong operating efficiencies and will structurally remove costs from our business," said Fettig. "In addition to this, we are implementing additional cost actions to further adjust our business to lower demand levels."
Across the globe, Whirlpool's total fourth-quarter sales declined 19 percent from 2007, falling from $5.33 billion in 4Q07 to $4.32 billion in 4Q08. While in the third quarter of 2008, Whirlpool could at least report year-over-year increases in some of its global sales sectors, all sales regions declined in the fourth quarter:
Whirlpool North America – fourth-quarter sales of $2.5 billion, a decrease of 18 percent from the prior year
Whirlpool Europe – fourth-quarter sales of $938 million, a decline of 16 percent from the prior year
Whirlpool Latin America – fourth-quarter sales of $777 million, a 26 percent decrease
Whirlpool Asia – fourth-quarter sales of $140 million, a decrease of 10 percent from 2007
"We expect 2009 economic conditions to be among the most challenging that we have faced," said Fettig in a company press release. "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."
The company currently has two plant closures under way.
