Whirlpool expects $400M in savings from Maytag purchase

Whirlpool Corporation announced May 23 that its merger with Maytag is expected to generate pre-tax annualized cost savings in excess of $400 million. Cost efficiencies are expected from all areas of the value chain, including product manufacturing, infrastructure and support areas, global procurement and logistics. The company expects to gain the majority of efficiencies during 2007, and anticipates savings to be fully realized in 2008. The company will incur approximately $450 million in pre-tax, one-time costs to realize the annualized savings estimates. Approximately $150 million of these costs are expected to impact earnings over the next three years with the remainder capitalized under purchase accounting.

The company's previous estimated cost savings were $300 million to $400 million with one-time costs of $350 million to $500 million.

"Our increased savings estimates further demonstrate the value-creating opportunity of this acquisition. The actions we have recently announced, including the consolidation of laundry production into our Clyde and Marion, Ohio, facilities, will represent a significant portion of our expected annualized savings," said Jeff M. Fettig, Whirlpool's chairman and chief executive officer. "We have moved quickly to integrate the Maytag business since closing the transaction seven weeks ago and we are pleased with our progress to date."

Following a thorough review, Whirlpool also announced its decision to sell the Hoover floor-care, Dixie-Narco vending systems, Amana commercial microwave and Jade commercial products appliance businesses. The financial results of these businesses will be classified as discontinued operations in the company's future financial statements.

"The decision to divest the floor-care and commercial businesses will allow us to focus on our core appliance business," said Fettig. "We have received strong interest from a number of potential buyers and anticipate completing these transactions by the end of this year."

The company also revised its guidance to reflect the integration of Maytag and now expects full-year 2006 earnings per diluted share from continuing operations of $6 to $6.25, compared to the pre-acquisition range of $7 to $7.25. Free cash flow is estimated to be in the $200 million to $300 million range for 2006. The company also announced that it expects 2007 full-year earnings per diluted share to be approximately $9.