WHIRLPOOL, the owner of Maytag, rose in late trading on Wednesday (Oct 23) after reporting better than expected earnings, and reaffirming its full-year sales forecast.
The results show that things are not getting worse for Whirlpool, which also owns the KitchenAid brand. While net sales trailed projections, the company said it expects consumer sentiment to improve once the US presidential election is over.
Net sales were US$4 billion in the three months ended Sep 30, Whirlpool said on Wednesday. That compares with an estimate of US$4.1 billion, according to the average of projections from Bloomberg. Adjusted earnings per share, however, beat expectations, helped by higher prices during promotional periods.
Net sales will be about US$16.9 billion this year, the company said. Whirlpool also reaffirmed its guidance for adjusted earnings per share.
Weakness in the US housing market has persisted, and consumers are now hesitant to spend on big-ticket items, especially ahead of the presidential election. In the company’s North America large appliance segment, revenue missed projections, declining 4.3 per cent from last year.
“We are seeing right now just consumer sentiment being lower, and a slowdown ahead of the election,” chief financial officer Jim Peters said. “A lot of consumers are just holding off on some bigger purchases.”
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“There is so much news and information flowing at people and the general tone of that news and information tends to have a negative slant to it,” he said about the election’s effect.
Yet he was confident that this will eventually pass. “It doesn’t matter who wins, it just matters that it’s over,” he added.
Whirlpool has been working to revive its business in an environment where squeezed consumers have been loath to buy expensive appliances. The company is trying to cut manufacturing and product costs to boost profitability despite lower sales. Earlier this year, it cut 1,000 salaried positions globally.
Peters said the company is still planning to reduce expenses by between US$300 million and US$400 million this year, but expects it to be towards the lower end of that range.
In late trading Wednesday in New York, Whirlpool shares rose 5.2 per cent before paring those gains. The stock had dropped 18 per cent this year to Wednesday’s close, as the S&P 500 Index gained more than 21 per cent.
US homeowners have been holding off on buying or selling homes as they wait for mortgage rates to decline. In September, sales of previously owned homes fell to an almost 14-year low.
Peters said he expects holiday sales for the company to be similar to last year, but predicted a pickup for smaller items, such as food choppers and hand blenders, that are popular as gifts.
“On the KitchenAid countertop small domestic, we do expect sales to be up,” Peters said. “In terms of major domestic appliances, I think you are going to be relatively flat.” BLOOMBERG
