Whirlpool Corp. (WHR) said Thursday it's considering a new
offensive against foreign-made household appliances that it
maintains are being sold in the U.S. for less than the cost to
manufacturer them.
Whirlpool's previous trade complaints have targeted
refrigerators and washing machines from Korea and Mexico. But the
company said Thursday that unfairly discounted appliances are now
flowing into the U.S. market from China, Thailand and possibly
other Asian countries.
"The marketplace has changed and gotten worse. More countries
are involved," said Chairman and Chief Executive Jeff Fettig during
an interview Thursday.
Whirlpool's stock was recently down 6.2% to $132.84 a share.
The U.S. Court of International Trade earlier this month upheld
Whirlpool's appeal of a 2012 decision by the U.S. International
Trade Commission that said domestic manufacturers of refrigerators
of refrigerators with bottom-mounted freezers weren't harmed by
imports from Korea's LG Electronics Inc. (066570.SE) and Samsung
Electronics Co. (005930.SE, SSNHZ) between 2008 and 2011.
Whirlpool wanted tariffs levied on the refrigerators after
alleging that they were sold for less than the cost of making them
in Mexico and Korea. The company also accused the Korean government
of unfairly subsidizing production of the refrigerators.
Rather than pursuing a rehearing of that case, Mr. Fettig said
the company may file a new, separate case with expanded evidence.
Mr. Fettig declined to provide specifics about the strategy, but
added "we believe there are faster vehicles available to us to both
monitor and address trade issues that we see in United States." LG
and Samsung did not immediately respond to requests for
comments.
Whirlpool, the world's largest appliance seller whose brands
include Maytag, Amana and KitchenAid, prevailed in convincing the
U.S. Commerce Department in 2012 that Samsung, LG and Electrolux
were selling large residential washing machines in the U.S. at
unfairly low prices. But Whirpool's complaints do not appear to
have discouraged appliance makers from continuing to offer steep
discounts on appliances. Analysts reported that discounts were used
extensively throughout the recently concluded holiday shopping
season to drive appliance sales.
Whirlpool, the world's largest seller of household appliances,
has focused on margin expansion and the introduction of high-value
innovations on appliances, while largely refraining from
margin-busting discounts. As a result, some analysts believe
Whirlpool is losing share in the U.S. appliance market where it has
traditionally dominated.
"We remain concerned about Whirlpool's U.S. market share, given
the potential for these industry promotions to persist into 2014,"
said Raymond James Equity Research analyst Sam Darkatsh in a recent
note to investors.
Whirlpool's fourth-quarter unit sales in North America grew by
9.6% from a year earlier. But industry-wide unit shipments of major
appliances in the U.S. tracked by the Association of Home Appliance
Manufacturers grew 11.8% during the fourth quarter, suggesting
Whirlpool surrendered some market share. But Whirlpool insisted
that it did not lose share and said the appliance types tracked by
the association don't mach up with the company's unit volume, which
also includes Mexico and Canada along with the U.S.
"You're not comparing apples with apples and even apples with
oranges," said Marc Bitzer, the company's president for North
America.
Whirlpool's fourth-quarter sales in North America rose 8.8% to
$2.72 billion. Operating profit from the region rose 28.6% to $301
million, as its operating margin expanded to 11% from 9.13% a year
earlier.
Whirlpool and other appliance makers endured a long slump in
appliance demand triggered by the collapse of the U.S. housing
market and recession in 2008. But an improving housing industry and
pent up demand for appliance replacements resuscitated the market
last year. Industry shipments of major appliances such as
refrigerators and washing machines rose 9.4% in 2013 from 2012.
Whirlpool said it expects industry unit shipments in the U.S. to
increase by 5% to 7% this year over 2013.
Strong demand for appliances in Brazil helped Whirlpool offset
sluggish market conditions in the U.S. and Europe. But inflation
and an unfavorable currency exchange rates have dampened
Whirlpool's sales and profit from Brazil. Whirlpool expects
industry shipments of appliances in Latin America to be flat in
2014.
"We expect inflation pressures and currency fluctuations to have
a negative impact on consumer demand, especially in the first
half," said Mike Todman, president of Whirlpool's international
business.
Whirlpool's fourth-quarter sales in Latin America rose 3.8%,
while operating income increased 18.7% on better margins.
The Benton Harbor, Mich.-based company's overall operating
margin for the quarter rose to 7% from 5.4% a year earlier.
Whirlpool's fourth-quarter profit climbed to $181 million, or $2.26
a share, from $122 million, or $1.52 a share, a year earlier. Sales
increased 6.2% to $5.09 billion. Excluding one-time charges,
earnings rose to $2.97 a share from $2.29 a share. Analysts were
expecting earnings of $3.03 per share on $5.02 billion of
sales.
For 2014, Whirlpool said it expects adjusted earnings of $12.00
to $12.50 a share, compared with $12.26 forecast by analysts.
Write to Bob Tita at robert.tita@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires