Whirlpool tops estimates but investors question momentum
NEW YORK (Reuters) - Whirlpool Corp (WHR.N) beat quarterly profit and sales estimates, but its shares fell as much as 5 percent as the top appliance maker refrained from raising shipment forecasts for its markets outside North America.
Whirlpool saw sales rise 43 percent in Asia and 24 percent in Latin America in the second quarter, but reiterated its unit shipment forecasts calling for a gain of 5 percent to 8 percent in Asia and about 10 percent in Brazil this year, raising concerns about future growth prospects.
"In the second half of the year, there is some uncertainty creeping into the investment thesis on Whirlpool," Wall Street Strategies' Brian Sozzi said, underscoring the lackluster shipment forecasts for Asia, Latin America and Europe.
The news came a day after rival Electrolux (ELUXb.ST) missed earnings forecasts and raised concerns about European demand.
Like many other U.S. companies, the maker of Maytag and KitchenAid appliances has looked to Latin American and Asian markets for growth amid weakness in Europe and a slowly recovering U.S. economy.
"For the balance of the year, we expect ... that the global economic environment will remain fragile but we do expect demand to be positive, albeit at a slower rate than in the first half of the year," Chief Executive Jeff Fettig said on a call with analysts.
The company also told investors it expected raw material costs for the year to be closer to the midpoint of its prior forecast range of $200 million to $300 million, with a good chunk of the costs to be realized only in the second half.
Whirlpool's second-quarter net income rose to $205 million, or $2.64 a share, from $78 million, or $1.04 a share, a year earlier.
Excluding items, Thomson Reuters I/B/E/S calculated the profit at $3.09 a share, compared with the analysts' average forecast of $2.17.
Sales rose about 8.8 percent to $4.53 billion, while analysts expected some $4.50 billion.
Despite the strong second quarter and an improved full-year profit outlook, Sozzi raised concerns about the back half of the year, citing fewer government stimulus measures for appliances, a cautious consumer and tougher comparisons.
A report on Tuesday showed June U.S. housing starts at their lowest level in eight months, but a rise in permits offered hope that home building was poised to pick up.
EUROPE WEAK, U.S. RECOVERING
Sales in North America, Whirlpool's top market, rose 6 percent to $2.5 billion. The company said it now expected 2010 U.S. industry unit shipments to come in at the top end of its prior outlook of a 3 percent to 5 percent increase.
Whirlpool's brighter shipment forecast for North America could be based on the home builder contracts it won recently and its hopes that consumers will spend some of their tax credits on appliances, Sozzi said.
In Europe, sales fell 6 percent to $739 million.
For 2010, Whirlpool forecast earnings of $9 to $9.50 a share, up from its prior outlook of $8 to $8.50.
Whirlpool shares were down 4.8 percent, or $4.43, at $88.52 on the New York Stock Exchange in midmorning, off an earlier low at $87.23.
(Reporting by Dhanya Skariachan; Editing by Matthew Lewis and Maureen Bavdek)
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