Whirlpool bullish on 2011; shares rise
NEW YORK (Reuters) - Whirlpool Corp (WHR.N) beat quarterly profit estimates on improving sales in most markets, prompting the world's largest appliance maker to issue a stronger-than-expected full-year forecast.
The news, which drove Whirlpool shares up nearly 5 percent on Wednesday, came the day after data showed U.S. consumers had perked up a bit in April as they worried less about inflation and the job market.
"Confidence is ultimately key," Wall Street Strategies analyst Brian Sozzi said.
"I think the homeowners said, 'OK, we are feeling a little bit better; let's replenish some of the appliances that we have held on to,'" he added.
U.S. shoppers are also opening their wallets for furniture and other pricey goods, analysts have said.
Whirlpool has been also winning more contracts from homebuilders in recent quarters, Sozzi said. He has a "buy" rating and a $95 price target on the stock.
Shares of Whirlpool were up 4.7 percent at $91.87 in trading before the market opened.
The Conference Board, a research group, said its index of consumer attitudes rose to a better-than-expected 65.4 in April from a revised 63.8 in March.
Whirlpool, the maker of Maytag and KitchenAid appliances, said its sales rose in emerging markets such as Asia and Latin America and showed modest improvement in the key North American region as well.
The company said it expected full-year industry unit shipments to rise between 2 percent and 3 percent in the United States, 5 percent to 10 percent in Latin America and 6 percent to 8 percent in Asia.
Sozzi said he was happy with the shipment outlook considering the continuing woes in the housing market and recent worries about rising commodity costs.
"The market was bracing for a potential warning from them, given where housing has come over the past couple of months, all the negative headlines out there," Sozzi said.
Some of Whirlpool's sales gains in the quarter are probably a reflection of some prebuying ahead of April's announced price increases, analysts David MacGregor of Longbow Research and Kenneth Zener of Keybanc Capital Markets have said.
Both Whirlpool and smaller Swedish rival Electrolux said in February that they planned to raise prices to pass soaring costs of energy and metals on to customers, but some analysts were skeptical that those attempts would pass muster with bargain-hungry shoppers.
On Wednesday, Electrolux (ELUXb.ST) said it expected its price rises to stick as rival manufacturers also look to pass on rising raw materials costs to customers.
IN EMERGING MARKETS WE TRUST
Whirlpool and Electrolux have benefited from their presence in fast-growing Latin American and Asian markets, fueled by the purchasing power of a burgeoning middle class.
A sluggish economy and weak housing market had dented sales in mature markets such as North America. But the companies are now profiting from signs of a U.S. recovery.
For 2011, Whirlpool anticipates earnings of $12 to $13 a share, while Wall Street was looking for $11.74.
First-quarter net income rose to $169 million, or $2.17 a share, from $164 million, or $2.13 a share, a year earlier.
Excluding items, the company earned $2.11 a share, handsomely beating the analysts' average estimate of $1.64, according to Thomson Reuters I/B/E/S.
Sales rose 3 percent to $4.40 billion, well above the analysts' average estimate of $4.26 billion.
Whirlpool has shut plants, cut jobs and moved some manufacturing to low-cost centers like Mexico. It has also started using common parts across its lines of dishwashers, refrigerators and washing machines.
(Reporting by Dhanya Skariachan; Additional reporting by Leah Schnurr; Editing by Lisa Von Ahn and Maureen Bavdek)