October 22, 2013 / 11:09 AM / in 6 years

UPDATE 3-Rebounding US housing, Europe lift Whirlpool outlook

* Third-quarter adj. earnings $2.72/share vs est $2.61

* Raises full-year earnings forecast to $9.90-10.10/share

* Third-quarter appliance sales rise in Europe and North America

* Shares rise as much as 11 pct

By Sagarika Jaisinghani

Oct 22 (Reuters) - Whirlpool Corp, 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 boosted sales of refrigerators, dishwashers and air conditioners.

Whirlpool’s shares rose as much as 11 percent 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.

“We continue to see positive trends in U.S. housing, the normal replacement cycle of appliances and a return of discretionary purchases to the market,” Chief Executive Jeff Fettig said on a post-earnings conference call.

His comments helped allay investor concerns about softening U.S. appliance demand in September, which were hit by a slowdown in consumer spending tied to the 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.

“We saw a small blip (from soft September demand) but it’s completely normalized and that gives us a lot of confidence about the fourth-quarter industry shipment,” said Marc Bitzer, president of the company’s North American division.

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

In the third quarter ended Sept. 30, Whirlpool’s sales in North America rose 8.3 percent to $2.6 billion, accounting for more than half of total sales.

John Owen, household analyst at Mintel Group, said Whirlpool posted the first “solidly positive” results for the industry in a few years.


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.

Whirlpool and Swedish rival Electrolux AB said in July they expected demand in Europe to come back, after several quarters of sluggish sales.

Fettig said that Europe was still weak, but appeared to be stabilizing.

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, having earlier forecast a decline of as much as 2 percent from last year.

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 said on Tuesday it raised its full-year earnings forecast to a range of $9.90 to $10.10 per share, excluding items, 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.

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


CEO 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.

Gross margins expanded to 18.1 percent in the third quarter from 15.6 percent a year earlier.

Whirlpool’s shares have gained about 50 percent in the past 12 months and outperformed the S&P 500 index. They were up 11 percent at $145.59 early afternoon on the New York Stock Exchange.

Shares of Electrolux closed up 2 percent on the Stockholm Stock Exchange.

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