UPDATE 4-Whirlpool cuts more jobs, outlook--shares fall
* EPS of $1.23 excl tax misses view of $1.69
* Company to cut 5,000 jobs, or 7 percent of workforce
* Cuts full-year EPS view to $5.75 to $6; pvs $7 to $7.50
* Shares fall 14.5 percent (Adds analyst comment)
By Karen Jacobs
ATLANTA, Oct 28 (Reuters) - Whirlpool Corp (WHR.N) said it would cut 7 percent of its workforce as the weakening global economy hurts appliance demand, and it posted a quarterly profit that missed analysts' estimates, sending shares down 14.5 percent.
The world's biggest appliance maker also slashed its 2008 earnings outlook on Tuesday and set new price increases. It expects higher restructuring costs and a deeper slump in demand in the United States and Europe, its biggest markets.
Whirlpool "has to hunker down and try and get through this environment by reducing the cost structure in line with a really weak demand environment that doesn't appear to be getting better," said Craig Hutson, senior bond analyst with Gimme Credit.
"There could be more to come in terms of further restructuring actions that would entail plant closures and job cuts," Hutson added.
The credit crunch and fears of a deep global recession are compounding woes of appliance makers, which were already grappling with weaker U.S. demand and higher costs for metals and oil.
Sweden's Electrolux (ELUXb.ST), the second-biggest appliance maker, reported a surprise rise in third-quarter profit on Monday on U.S. price increases, but said the financial crisis had led consumers to delay purchases or trade down to cheaper products.
Whirlpool also said consumers were putting off appliance buys, even to replace worn-out ones in some cases. It also suspended a share buyback, and slashed its forecast for free cash flow to a range of zero to $50 million this year from an earlier view of up to $550 million.
"The global credit crisis has had a profound negative impact on what was already a weakening and very fragile global economy," Whirlpool Chief Executive Jeff Fettig said in a statement.
He added that falling home prices, rising unemployment and low consumer confidence would likely keep demand soft through the middle of 2009.
Whirlpool, whose brands include Maytag, Amana and KitchenAid, said the 5,000 job cuts included previously announced plant closures as well as new reductions, and would be carried out by the end of 2009.
Net earnings in the third quarter fell 7 percent to $163 million, or $2.15 a share, from $175 million, or $2.20 a share, a year earlier.
Excluding a tax benefit, profit came to $1.23 a share, compared with $1.69 expected by analysts, according to Reuters Estimates.
Sales rose 1 percent to $4.9 billion.
In North America, Whirlpool's biggest market, sales fell 7 percent to $2.7 billion, as higher materials costs led to a decline in operating profit.
Sales rose 9 percent in Europe, 22 percent in Latin America and 11 percent in Asia.
Whirlpool kept its appliance shipment forecasts for Asia and Latin America unchanged but said it now expects a steeper drop in shipments in the United States and Europe.
North America appliance shipments are now expected to fall about 10 percent in 2008, compared with a previous forecast of a 6 to 7 percent drop. Whirlpool now expects a shipment decline of 3 to 4 percent in Europe, worse than its previous forecast of a 2 to 3 percent drop.
The Benton Harbor, Michigan, manufacturer said previously announced closures of two U.S. and two Mexican plants eliminated about 2,000 jobs.
It also plans to close a Jackson, Tennessee, plant and cut about 500 jobs; pare 500 salaried posts in North America; and trim about 1,900 jobs in its international regions.
Whirlpool said the job cuts would produce savings of about $275 million annually.
The company expects full-year profit of $5.75 a share to $6 a share, down from its previous forecast of $7 to $7.50. It said 2008 restructuring costs should be about $170 million, compared with a previous estimate of $100 million.
Whirlpool shares were down $7.24, or 14.5 percent, to $42.79 in afternoon New York Stock Exchange trading after earlier trading as low as $38.21. The stock has fallen about 46 percent this year. (Reporting by Karen Jacobs, editing by Gerald E. McCormick and Derek Caney)
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