October 22, 2013 / 10:26 AM / 7 years ago

Whirlpool raises forecast as home appliance sales rebound

(Reuters) - Whirlpool Corp (WHR.N), the world’s No. 1 home appliance maker, raised its full-year earnings forecast after a recovering U.S. housing market and consumer sentiment in Europe lifted sales of its refrigerators, dishwashers and air conditioners.

Workers assemble appliances at the Whirlpool manufacturing plant in Cleveland, Tennessee in this August 21, 2013 file photo. REUTERS/Chris Berry/Files

Whirlpool’s shares rose 6 percent before the bell on Tuesday after the company also said its third-quarter profit more than doubled, partly due to improved margins that have resulted from shifting some production to low-cost centers.

The higher forecast, helped by higher North American sales, allayed investor concerns about softening U.S. appliance demand in September, which were then exacerbated by a slowdown in consumer spending tied to the partial U.S. government shutdown.

Some analysts had already brushed aside such concerns, saying that consumer confidence tended to recover quickly once a perceived threat had passed. The 16-day government shutdown ended last week.

In the third quarter ended September 30, Whirlpool’s sales in North America rose 8.3 percent to $2.6 billion.

The company said it expected overall industry sales in North America to rise about 9 percent in 2013, compared with an earlier forecast within a range of 6 percent to 8 percent.

Benton Harbor, Michigan-based Whirlpool, which sells household products under the Maytag and KitchenAid brands, has also benefited from a recovery in European consumer demand.

After several quarters of sluggish sales in Europe, Whirlpool and Swedish rival Electrolux AB (ELUXb.ST) said in July they expected sales in the region to come back in the second half of 2013.

Heading into October, German consumer confidence rose to its highest level in six years.

Whirlpool said on Tuesday that sales in its Europe, Middle East and Africa division rose 10.8 percent to $778 million in the third quarter.

The company said it expects overall industry sales in the region to be flat from a year earlier, having earlier forecast a decline of as much as 2 percent.

Electrolux is scheduled to report third-quarter results on Friday. Analysts expect its sales in Europe to rise 2.2 percent and revenue from North America to jump 6.5 percent.


Whirlpool Chief Executive Jeff Fettig said in a statement that the company’s earnings had been boosted by its “actions to increase margins”, as well as higher revenue.

Whirlpool embarked upon a cost-cutting drive this year. As well as moving some production to countries such as Mexico, it began using common parts in its dishwashers, refrigerators and washing machines, rather than separate parts for each type of appliance.

Whirlpool raised its full-year earnings forecast to $9.90 to $10.10 per share, excluding items, for the full year, from its earlier expectation of $9.50 to $10.00.

Analysts on average were expecting full-year earnings of $9.97 per share, according to Thomson Reuters I/B/E/S.

Net income available to Whirlpool rose to $196 million, or $2.42 per share, in the third quarter from $74 million, or 94 cents per share, a year earlier.

A Whirlpool logo is seen on a range door at the Whirlpool manufacturing plant in Cleveland, Tennessee August 21, 2013. REUTERS/Chris Berry

Excluding items, Whirlpool earned $2.72 per share, above the $2.61 that analysts had expected.

Whirlpool's shares have gained about 50 percent in the past 12 months and outperformed the S&P 500 .SPX index. They closed at $130.97 on the New York Stock Exchange on Monday.

Shares of Electrolux were up 2 percent at 1200 GMT on the Stockholm Stock Exchange.

Editing by Savio D'Souza and Robin Paxton

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