Image: Whirlpool Chairman and CEO Marc Bitzer
(Reuters) – Whirlpool Corp beat analysts’ estimates for quarterly earnings and forecast 2020 profit largely above expectations on Monday, as the appliances maker raised prices and reined in expenses to cushion the impact of higher production costs.
The owner of brands such as KitchenAid and Maytag increased prices twice in 2019 as U.S. tariffs on imported steel and aluminum, both major components in the company’s products, pushed up the cost of production.
Chief Executive Officer Marc Bitzer told CNBC that the company will maintain the high prices.
“Yes, we’ve seen some relief on the raw materials. And yes, it’s coming down. But we’re far away from having kind of eaten into that $700 million high of cost increases,” he said, noting that the company is still facing the impact of rising cost over the past two years.
Whirlpool said it expects full-year 2020 profit to be between $16.00 per share and $17.00 per share, the mid-point of which is above analysts’ average estimate of $16.34, according to IBES data from Refinitiv.
Meanwhile, Donald Trump last week announced adjustments to tariff-rate quotas (TRQ) on large residential washers, saying that domestic producers had begun to do better in the face of foreign competitors but more was left to be done.
Net sales fell nearly 5% to $5.38 billion, missing analysts’ estimates of $5.52 billion as higher prices crimped demand for washing machines and dishwashers.
Sales were flat in the company’s biggest market of North America, while they fell in the other three regions.
Brand transition investments and soft demand environment resulted in another quarter with operating losses in China, the company said.
Net earnings available to the company rose to $288 million, or $4.52 per share, in the fourth quarter ended Dec. 31, from $170 million, or $2.64 per share, a year earlier.
Whirlpool said cost of products sold fell nearly 8% to $4.33 billion.
Excluding items, the company earned $4.91 per share, beating estimate of $4.27.
Whirlpool is expected to hold a post-earnings conference call with analysts on Tuesday, Jan. 28, 2020, at 8:00am ET. A live webcast is available at investors.whirlpoolcorp.com.
The company’s shares were flat in extended trading.
Reporting by C. Nivedita and Devbrat Saha in Bengaluru; Editing by Sriraj Kalluvila.