Whirlpool Opens New Plant - Analyst Blog

Date : 04/12/2012 @ 4:47PM
Source : Zacks
Stock : General Electric Company (GE)
Quote : 6.93  0.0 (0.00%) @ 1:58PM
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Whirlpool Opens New Plant - Analyst Blog

Whirlpool Corporation (WHR) has opened a million-square-feet facility in East Tennessee that will manufacture premium cooking products. The new facility, replacing a 123-year-old plant at the same location, will add 130 jobs to the company’s 1,500 people workforce.

The company has invested $200 million in the project. The facility also includes a 400,000-square-foot distribution center.

Whirlpool posted a profit of $2.62 per share for the fourth quarter of 2011 compared with $171 million or $2.19 per share in the same period last year. However, excluding special items, profits decreased to 32 cents per share from 43 cents per share in the fourth quarter of 2010. It was significantly lower than the Zacks Consensus Estimate of $1.93 per share.

Sales in the quarter fell marginally to $4.9 billion from $5.0 billion as improving price/mix was offset by unfavorable currency and lower industry demand. It was slightly lower than the Zacks Consensus Estimate of $5.0 billion.

Sales in North America rose a meager 1% to $2.6 billion. Operating profit improved to $202 million from $53 million in the previous year. It was favorably affected by the implementation of previously announced price increases and improved product mix that more than offset lower industry volumes, higher material costs and the impact from lower production volumes. Whirlpool expects U.S. industry unit shipments to increase in the range of 0%–3% in 2012.

Whirlpool is considered the largest home-appliances manufacturer in the world, ahead of ElectroluxAB (ELUXY), LG, Samsung and General Electric Co. (GE). The company is placed among the leading home appliances makers in India and Europe.

Despite its market-leading position, we are concerned about the ongoing weakness in Europe and high customer concentration faced by the company. The company’s large trade customers include Sears Holdings Corporation (SHLD), Lowe’s Companies Inc. (LOW), The Home Depot, Inc. (HD), Casas Bahia, Best Buy Co. Inc. (BBY) and Ikea, who have significant leverage as buyers.

As a result, the shares of Whirlpool are currently maintaining a Zacks #3 Rank that translates into a Hold rating for the short term (1 to 3 months).

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