Reuters called it “a steep slowdown in sales for the fourth quarter,” and after hours trading reflected that early this evening as Whirlpool Corporation posted fourth quarter revenues and earnings per share data. Despite the sales rollback, earnings per share beat Wall Street expectations by roughly 9-cents, checking in at $4.10 per share when expectations had been for $4.01 per share in the average among analysts. Early after hours trading showed the share price off by 1-percent.
In another measure, the Benton Harbor-based appliance giant missed street expectations by some $140-million dollars. The company’s posted revenue of $5.7-billion in the period missed Wall Street forecasts for $5.84-billion.
Whirlpool CEO Marc Bitzer says, “Our unique global strategic position, coupled with favorable macro-economic conditions, gives us strong confidence towards our long-term value creation goals.” He adds, “The solid fourth-quarter exit run rates, and faster than anticipated progress on price/mix and fixed cost reduction, are very encouraging in that respect.”
Fourth-quarter net sales were $5.7 billion, an increase of 1-percent compared to the same prior-year period. However, excluding the impact of currency, sales decreased 1.6-percent.
The company’s fourth-quarter net loss was $268 million, or $3.69 per diluted share, including a one-time non-cash charge of approximately $420 million related to tax reform, as compared to net earnings of $180 million, or $2.36 per diluted share, reported for the same prior-year period. Fourth-quarter ongoing earnings per diluted share were $4.10 compared to $4.33 in the same period a year ago.
For the full year, net sales were $21.3 billion compared to $20.7 billion in 2016. Excluding the impact of currency, sales increased 1.5-percent over the course of the full year. Full-year operating profit was $1.1 billion, or 5.3-percent of sales, compared to $1.4 billion, or 6.6-percent of sales, a year earlier.
Full-year ongoing operating profit was $1.5 billion, or 6.8-percent of sales, compared to $1.6 billion, or 7.8-percent of sales, in the prior year. Net earnings per diluted share were $4.70, compared to $11.50 in the prior year. Those net earnings per diluted share (in 2017) were adversely impacted by a one-time non-cash charge of approximately $420 million related to tax reform. Ongoing earnings per diluted share were $13.74, compared to $14.06 in the prior year.
For the twelve months ended December 31, 2017, Whirlpool Corporation reported cash provided by operating activities of $1.3 billion compared to $1.2 billion in the same prior-year period. The Company reported free cash flow of $707 million for 2017 compared to $630 million in the prior year.
The company breaks out regional sectors for a more concise view of the individual markets. Here is that review:
FOURTH-QUARTER REGIONAL REVIEW
Whirlpool North America
Whirlpool North America reported fourth-quarter net sales of $3.1 billion, in-line with the same prior-year period. Excluding the impact of currency, sales decreased 0.8-percent.
The region reported fourth-quarter operating profit of $368 million, or 11.8-percent of sales, compared to $349 million, or 11.2-percent of sales, in the same prior-year period. During the quarter, favorable product price/mix more than offset raw material inflation.
Whirlpool Europe, Middle East and Africa
Whirlpool Europe, Middle East and Africa reported fourth-quarter net sales of $1.4 billion, an increase of 1.5-percent compared to the same prior-year period. Excluding the impact of currency, sales decreased 5.6-percent.
The region reported fourth-quarter GAAP operating profit of $4 million, or 0.3-percent of sales, compared to GAAP operating profit of $17 million, or 1.3-percent of sales, in the same prior-year period. Ongoing segment operating profit was $4 million, or 0.3-percent of sales, compared to $45 million, or 3.3-percent of sales, in the same prior-year period. During the quarter, unfavorable product price/mix and raw material inflation more than offset favorable cost productivity and restructuring benefits.
Whirlpool Latin America
Whirlpool Latin America reported fourth-quarter net sales of $905 million, compared to $860 million in the same prior-year period, an increase of 5.2-percent. Excluding the impact of currency, sales increased 4.4-percent.
The region reported fourth-quarter operating profit of $64 million, or 7.1-percent of sales, compared to $71 million, or 8.3-percent of sales, in the same prior-year period. During the quarter, raw material inflation was partially offset by cost productivity and the sale and monetization of certain tax credits.
Whirlpool Asia
Whirlpool Asia reported fourth-quarter net sales of $333 million, compared to $352 million in the same prior-year period. Excluding the impact of currency, sales decreased 8.3-percent.
The region reported a fourth-quarter GAAP operating loss of $1 million, or -0.4-percent of sales, compared to GAAP operating profit of $18 million, or 4.9-percent of sales, in the same prior-year period. Ongoing segment operating loss was $1 million, or -0.4-percent of sales, compared to ongoing segment operating profit of $19 million, or 5.3-percent of sales, in the same prior-year period. On a GAAP and ongoing basis, favorable impacts from product price/mix were more than offset by unit volume declines and raw material inflation.
OUTLOOK
For the full-year 2018, the Company expects to generate cash from operating activities of approximately $1.7 billion to $1.8 billion and free cash flow of approximately $1.0 billion to $1.1 billion. Included in this guidance are restructuring cash outlays of up to $300 million, pension contributions of $35 million and, with respect to free cash flow, capital spending of approximately $675 million.
For the full-year 2018, Whirlpool Corporation expects GAAP earnings per diluted share of $12.45 to $13.45 and ongoing earnings per diluted share of $14.50 to $15.50. Wall Street was expecting $15.52 prior to this report.
Jim Peters is Chief Financial Officer for Whirlpool. He says, “We are confident that our cost reduction initiatives and global price/mix will be a catalyst for significant margin improvements in the coming year.” He adds, “As a result, we expect to achieve our cash conversion goal and continue returning strong levels of cash to shareholders.”
