Whirlpool Corporation on October 28 announced earnings from continuing operations decreased 7 percent to $163 million, or $2.15 per diluted share, compared to $175 million, or $2.20 per diluted share reported during the previous year's quarter. Revenue of $4.9 billion for the quarter increased 1 percent from the $4.8 billion reported in the third quarter of 2007.
Third-quarter earnings reflect lower global unit volumes, higher material and oil-related costs and lower asset sale gains compared to the third quarter of 2007. These items were partially offset by an income tax benefit, favorable price/mix and productivity initiatives during the quarter. The company's results included $10 million in asset sale gains compared with $41 million of asset sale gains and the sale of an investment in the previous year's quarter.
"We are in the midst of a rapidly changing and very challenging economic environment. We have seen a sharp drop in demand in North America and Europe during the third quarter, and we do not expect demand conditions to improve in the near term," said Jeff M. Fettig, Whirlpool Corporation chairman and chief executive officer. "Our third-quarter results were negatively impacted by declining demand and record levels of cost inflation. These unfavorable factors were partially offset by improved price/mix and productivity.
"The global credit crisis has had a profound negative impact on what was already a weakening and very fragile global economy. Declining home values, rising unemployment and very low consumer confidence levels will likely prolong a negative demand environment at least through the middle of 2009. In anticipation of this environment, we have announced substantial cost and production-capacity reductions to adjust our business cost structure to expected demand levels. We will reduce our global workforce by approximately 5,000 positions by the end of 2009. In addition to the four facility closures we have announced earlier this year, we are also closing our Jackson, Tennessee, facility and transferring production into our Findlay, Ohio, location."
The company outlined the following actions:
· A reduction in force of approximately 5,000 jobs, which is being implemented across the global organization. The reduction includes both jobs that have already been announced through plant closures along with new reductions taking place now and through the end of 2009.
· The company will close its facility in Jackson, Tenn. Production from Jackson will be consolidated into the Findlay, Ohio, plant. The closure will result in a reduction of approximately 500 positions. Since January 2008, the company announced the closure of plants in LaVergne, Tenn.; Oxford, Miss.; Puebla, Mexico; and Reynosa, Mexico, which resulted in a reduction of approximately 2,000 jobs.
· The company will reduce approximately 500 salaried positions throughout North America. These include both full time and contractor positions.
· Whirlpool is implementing reductions across its international regions totaling approximately 1,900 jobs with the majority occurring in Europe. These are comprised of new reductions as well as those announced earlier this year.
These actions do not include current or potential future layoffs, which are intended to be temporary in nature.
According to Fettig, the actions are expected to produce savings of approximately $275 million on an annualized basis.
"While decisions to eliminate jobs and close facilities are very difficult, they are necessary to create a cost-effective business structure,” he said. “These changes will ensure that our company is proactively taking the necessary steps to adjust its cost structure and production capacity to lower expected demand levels."