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Banks

Whirlpool profit misses expectations as Brexit hits sales

(Reuters) - Whirlpool Corp WHR.N, the world's largest maker of home appliances, reported lower-than-expected fourth-quarter earnings on Thursday, hurt by a decline in sales in the United Kingdom following the vote in June to leave the European Union.

Specialist trader Joe Mastrolia works at the post that trades Whirlpool on the floor at the New York Stock Exchange, July 19, 2013. REUTERS/Brendan McDermid

Margins were negatively impacted by about $40 million in the UK due to a decline in the value of the pound and a drop in demand associated with the Brexit decision, the company said.

Whirlpool’s overall net sales rose 1.7 percent to $5.66 billion in the quarter ended Dec. 31, but sales in Europe, the Middle East and Africa tumbled 6.7 percent to $1.4 billion.

Total sales had fallen in the previous four quarters due to soft demand, tough competition in the U.S. market and, more recently, the pound’s weakness.

“All in all (Brexit) has cost us, just last year, probably 80 cents a share in the second half, which put a lot of pressure on the rest of our business,” Chief Executive and Chairman Jeff Fettig said on a call with analysts.

Fettig said he expected the impact of Brexit to “lessen somewhat” in the first and second quarters, but that Whirlpool’s business wouldn’t recover from Brexit until the third quarter.

Fettig was one of a dozen chief executives who visited the White House on Monday for a meeting with U.S. President Donald Trump that focused on corporate tax, regulations and trade.

Shares of Whirlpool, which had risen 20.4 percent since Trump's Nov. 8 election victory, were down 7.5 percent in morning trading. The stock was the third-biggest loser on the Dow Jones U.S. Consumer Goods index .DJUSNC.

Sales in North America, the company’s biggest market, rose 6.9 percent to $3.1 billion.

Whirlpool, whose brands also include KitchenAid and Maytag, said it expected full-year industry unit shipments in the United States to increase by 4-6 percent.

Trump, a real estate developer, has particularly focused on manufacturing, lamenting during his inaugural address last week about “rusted-out factories scattered like tombstones across the landscape of our nation” and vowing to boost U.S. industries over foreign ones.

Net income available to Whirlpool was unchanged at $180 million in the quarter, but earnings per share rose to $2.36 from $2.28. Earnings from continuing operations increased to $4.33 per share from $4.10 but missed the average analyst estimate of $4.44, according to Thomson Reuters I/B/E/S.

Whirlpool forecast 2017 earnings from ongoing operations of $15.25-$16.25 per share, within the average estimate of $15.96.

Swedish rival Electrolux ELUXb.ST said last month it expected slower growth this year in both North America and in Europe, including Britain.

Whirlpool said on Tuesday it would restructure its dryer manufacturing operations in Europe, Middle East and Africa and cut about 500 jobs in the region.

The company said it expected costs related to the restructuring of about $88 million.

Reporting by Richa Naidu in Bengaluru; Editing by Savio D’Souza, Ted Kerr and Saumyadeb Chakrabarty

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