Whirlpool Sales Slowing Led by European Division
Whirlpool Corporation (NYSE:WHR) stock plunged more than 10% after the home appliances company reported weaker-than-expected third-quarter earnings and cut its full-year earnings guidance.
Stocks started to slide as the Benton Harbor, Michigan-based company posted adjusted earnings of $3.66 per diluted share, which is lower than analysts’ estimates of $3.86 per share.
Advertisement
Revenue of $5.25 billion also fell short of Wall Street’s projections of $5.32 billion. In the same quarter last year, Whirlpool reported adjusted earnings of $3.45 per diluted share on revenue of $5.28 billion.
“In a challenging external environment, we delivered record third-quarter ongoing earnings per share by leveraging our portfolio of leading brands, innovative new products and a continued focus on cost productivity,” said Jeff Fettig, chairman and chief executive officer of Whirlpool Corporation, in a statement. “The fundamentals of our business are strong.” (Source: “Whirlpool Corporation Reports Third-Quarter 2016 Results,” Whirlpool Corporation, October 25, 2016.)
But investors weren’t happy with the performance, so they punished the company’s shares, sending them to their lowest level since February of this year. Whirlpool stock was trading at $151.11 in late-afternoon trading, down about $19.00 a share.
The earnings data also showed that the biggest impact on the company’s sales is coming from weak sales growth in its Europe, Middle East, and Africa region, where sales declined by six percent to $1.3 billion, compared to $1.5 billion in the same period a year ago.
While downgrading its full-year earnings guidance, Whirlpool said it now expects earnings per diluted share of $11.50 to $11.75 and ongoing business earnings per diluted share of $14.00 to $14.25, as the company faces softening demand in the U.S. and the U.K. with the continued devaluation of the British pound.
Credits: Flickr / jackie1170
“We are confident that our previously deployed plans will deliver a record year of performance with strong revenue growth and margin expansion as we manage through continued challenges in a volatile global environment,” said Fettig. “Our long-term strategic priorities remain unchanged and we will continue to deliver shareholder value through the execution of our priorities and a balanced approach to capital allocation.” (Source: Ibid.)
Whirlpool says it may generate cash from operating activities of $1.35 billion to $1.4 billion and free cash flow of approximately $700.0 million for 2016 fiscal year.
