Whirlpool profit falls on global sales slowdown

By Karen Jacobs

ATLANTA (Reuters) - Whirlpool Corp reported a 76 percent drop in fourth-quarter profit as sales crumbled in the global slowdown, and the world's biggest appliance maker said earnings would also fall in 2009.

The maker of Maytag and KitchenAid appliances posted an operating loss in North America, its largest market, and said on Monday that it was in talks with banks regarding renewal of credit lines.

Whirlpool's debt ratings have been downgraded to a notch above speculative, or "junk," status by major agencies recently, a move that could make raising funds through the credit markets more expensive.

"The results were brutal," said Mirko Mikelic, a senior portfolio manager with Fifth Third Asset Management.

Mikelic said the keys to weathering 2009 were more global cutbacks and cash conservation.

"Eventually the global economy will get back up on its feet," Mikelic said, "but this year will be a particularly stinging year."

Fourth-quarter profit fell to $44 million, or 60 cents a diluted share, from $187 million, or $2.38 a share, a year earlier. Adjusted for one-time items including $43 million in asset sale gains, profit came to 44 cents a share, compared with 78 cents expected by analysts on average, according to Reuters Estimates.

Quarterly sales fell 19 percent to $4.3 billion as appliance demand continued to slow in the recession.

Shares of the company were up 85 cents or 2.3 percent at $37.24 on the New York Stock Exchange on Monday afternoon, after falling as much as 11 percent earlier in the day.

CREDIT COMPLIANCE

Whirlpool tapped into a $2.2 billion credit facility during the fourth quarter and said it had $247 million outstanding on that credit line at year's end. It added it was in full compliance with bank covenants.

"We expect Whirlpool to remain within covenants, though we believe the company may proactively amend them," Cowen & Co analyst Laura Champine said in a research note.

In North America, sales fell 18 percent to $2.5 billion as industrywide shipments of appliances dropped about 10 percent. Whirlpool said it expected U.S. industry shipments, an important gauge of sales, to fall about 10 percent this year.

The North American unit had an operating loss of $20 million, against a year-earlier profit of $175 million, hurt by the lower sales, product recall costs and higher material and oil expenses.

Fourth-quarter sales fell 16 percent in Europe, 26 percent in Latin America and 10 percent in Asia.