Now while certain talking heads are saying the results show housing recovery, this doesn't seem to exactly be what the company is saying but let's not get mired in the details when we're talking green shoots. By the way Bloomberg reports 15% of all American homes now sit empty; I assume 8% of those empty buildings are overrun by green shoots.Now to give kudos to Whirlpool (WHR) they are doing what is necessary - but at some point you cut to the bone, and an economy needs people working to actually pay for the products from these companies. But at least there is always China, Brazil, and India. Again valuation begins to come into play - at $3.50 (midpoint of their 09 guidance) you are paying 14x FORWARD estimates for... an appliance maker.
Via Reuters
- Whirlpool Corp (WHR) reported a surprise quarterly profit on Monday as cost-cutting efforts helped the world's biggest appliance maker weather a slump in global sales, and its shares rose as much as 17 percent. The maker of Maytag and KitchenAid appliances also backed its 2009 profit forecast of $3 to $4 a share.
- Whirlpool, whose other brands include Jenn-Air, Amana, Brastemp, Consul and Bauknechtand, reported first-quarter earnings of $68 million, or 91 cents a share, compared with $94 million, or $1.22 a share, a year earlier. Adjusted for one-time items, profit came to 59 cents a share, while analysts on average were expecting a loss of 18 cents, according to Reuters Estimates. (that's actually a pretty good number)
- Sales at the Benton Harbor, Michigan-based company fell 23 percent to $3.6 billion.
- Whirlpool, which has been in talks with banks about renewing credit lines, has frozen salaries, reduced its contribution to retirement plans and taken other steps to cut costs.
- Based on current economic conditions, the company expects 2009 U.S. industry unit shipments to fall about 10 percent to 12 percent from 2008 levels, compared with its prior outlook of a 10 percent decline. In Europe, Whirlpool expects 2009 industry unit shipments to decline some 10 percent from 2008 levels. It had previously expected a fall of 8 percent in the region. (so both these regions Whirpool is saying things are worse than they previously thought - which seems to fly in the face of green shoot talk but...)
- For 2009, Whirlpool sees free cash flow of $300 million to $400 million.
- "Looking at the components of demand, we now expect to see a 41 percent decline in new home completions," said Mike Todman, president of Whirlpool North America. "This is down approximately six points from our previous estimate. "Our forecast for existing home sales remains unchanged at a 9 percent decline."
- But Whirlpool executives believe "it is just a matter of time" before shoppers start buying more major home appliances, Todman said. (eventually as things break down, they must be replaced - which is why we'll always still have at least a "replacement" rate level of purchases in the economy) "Some consumers continue to delay replacement purchases, even for appliances that are beyond repair, due to the economic uncertainty," he said. "However, many of our products are considered basic necessities by consumers, and any purchases that can be delayed ultimately will be replaced."
- Earnings were boosted by cost-reduction and productivity initiatives, Whirlpool said, but that was offset by higher material costs and substantially lower global sales and production volumes.
- North American sales of $2.1 billion were down 20 percent from the first quarter of 2008. Whirlpool Europe reported sales of $696 million, down 26 percent, while sales for Whirlpool Latin America dropped 26 percent to $689 million and for Whirlpool Asia fell 13 percent to $120 million.
- While sales in most of its major markets were weak, "demand was relatively stable" in Brazil, India and China, said Roy Templin, executive vice president and chief financial officer. (this is BIC - we like it better than BRIC)
1 comments:
from post: (eventually as things break down, they must be replaced - which is why we'll always still have at least a "replacement" rate level of purchases in the economy) "Some consumers continue to delay replacement purchases, even for appliances that are beyond repair, due to the economic uncertainty," he said. "However, many of our products are considered basic necessities by consumers, and any purchases that can be delayed ultimately will be replaced."
I just love how this basic argument is being posed as a bull market thesis these days. Hey, business isn't actually going to be zero so bid 'em up! LOL I just pity the poor average Joe fool who's buying that as a basis for buying in a this point.
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