Financial Performance

Whirlpool Shares Dive 9% on Q2 Earnings Miss

President Trump's global trade war has driven up the cost of steel and resin, the company's biggest raw material inputs.
Matthew HellerJuly 24, 2018

Whirlpool shares fell sharply in extended trading on Monday after the appliance maker posted disappointing quarterly earnings amid weak sales in the region encompassing Europe, the Middle East and Africa (EMEA).

After grappling with raw material inflation and declining unit volume last year, Whirlpool had hoped for a smoother ride in 2018 after the Trump administration slapped tariffs on washing machines imported by rivals LG and Samsung.

But its second-quarter results showed the effects of Trump’s global trade war, which has driven up the cost of steel and resin, the company’s biggest raw material inputs.

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For the quarter, Whirlpool earned $3.20 per share on revenue of $5.14 billion. Analysts had expected earnings of $3.69 per share on revenue of $5.29 billion.

The company also lowered its full-year guidance for adjusted earnings per share to between $14.20 and $14.80 from between $14.50 and $15.50. In after-hours trading, its shares dropped 9.2% to $136.75.

“We are pleased to deliver margin expansion in a very challenging cost environment, driven by strong North America margins and significant global price/mix improvement during the second quarter,” CEO Marc Bitzer said in a news release.

“Despite these positives, our performance in EMEA was below expectations,” he added. “As a result, we are taking strong actions to improve our operational execution, and remain confident that we will deliver value for our shareholders in the coming quarters.”

In the EMEA region, sales decreased 12.3%, excluding currency impacts. “The favorable impacts of product price/mix and restructuring benefits were more than offset by unit volume declines, raw material inflation and unfavorable foreign currency impacts,” Whirlpool said in a news release.

North American sales slipped 2.2% as the company shipped lower volumes of products but sold more higher-priced goods.

“Whirlpool got hit by a triple-whammy [in EMEA]: raw material prices rose and sales volume dropped even as it took a hit from currency impacts,” Barron’s said.

CFO Jim Peters said Whirlpool expected to “drive margin expansion and improved cash conversion this year through positive price/mix and strong actions in EMEA.”