(Reuters) - Whirlpool Corp (WHR.N) reported a higher-than-expected quarterly profit as price increases and cost cuts at the world’s largest appliance maker helped combat weak demand for appliances in Europe and North America.
The results echoed those of smaller rival Electrolux AB (ELUXb.ST) of Sweden, which also counted on price rises and sales in Latin America to fight weak demand in mature markets.
Both manufacturers raised appliance prices last year to pass soaring raw material costs on to customers. The move triggered analysts’ concerns that the higher prices could hurt the companies’ market share, especially as some South Korean rivals such as LG Electronics Inc (066570.KS) and Samsung Electronics Co Ltd (005930.KS) kept their prices unchanged.
At the time, Whirlpool’s Chief Executive Jeff Fettig said it was not “economically feasible” for Whirlpool to avoid raising prices to woo shoppers.
The results from Whirlpool and Electrolux this week show that the appliance makers are finally having some luck in making price increases stick, said Brian Sozzi, chief equities analyst at NBG Productions. Whirlpool’s previous attempt to raise prices, in 2010, didn’t pass muster with bargain-hungry consumers.
“It looks like their shipment guidance hasn’t changed much, despite them raising prices significantly throughout 2011. So that’s also a positive sign,” Sozzi said.
Net income at Whirlpool fell to $92 million, or $1.17 a share, in the first quarter, from $169 million, or $2.17 a share, a year earlier. Excluding items, the company earned $1.41 a share, beating analysts’ average estimate of $1.12 a share, according to Thomson Reuters I/B/E/S.
Sales at the maker of Maytag and KitchenAid appliances fell about 1.2 percent to $4.35 billion, while analysts had expected $4.38 billion.
Based on the current economic outlook, the company expects U.S. unit shipments this year to be at the low end of its prior forecast, ranging between steady to a rise of 3 percent. It expects shipments to Europe, Middle East and Africa to drop 2 percent to 5 percent.
Whirlpool anticipates earnings of $6.50 to $7 a share this year, while analysts expect a profit of $6.21 a share.
The Latin American market looks promising for the company this year, with unit shipments expected to be at the high end of its previous forecast of a 2 percent to 5 percent rise. Whirlpool expects unit shipments to Asia to be at the low end of its previous 2 percent to 4 percent range.
Whirlpool’s shares, which have surged about 45 percent in the year to date, were little changed in early trading Thursday on the New York Stock Exchange.
Editing by Bernadette Baum