Oct. 28 (Bloomberg) -- Whirlpool Corp., the world's largest appliance maker, will cut 5,000 jobs, or 6.8 percent of its workforce, and forecast lower annual profit as the global credit crunch and U.S. housing slump clips appliance sales.

Whirlpool dropped 8.3 percent in New York, 1 of 11 stocks in the Standard and Poor's 500 Index to decline today.

Net income fell 6.9 percent to $163 million, or $2.15 a share, in the third quarter, as raw-material costs rose, the maker of Maytag and KitchenAid appliances said today in a statement. Sales advanced 1.3 percent, the slowest pace since the third quarter of last year.

The global financial crisis, declining home values, rising unemployment and lower consumer confidence will keep appliance sales from rebounding anytime soon, Chief Executive Officer Jeff Fettig said in the statement. Sales in North America, Whirlpool's biggest market, declined 7 percent.

``The outlook for any company that is selling products to the consumer right now is pretty bleak,'' David MacGregor, an Independence, Ohio-based analyst with Longbow Research, said in a telephone interview. ``There is no sign of relief anytime soon.''

Whirlpool declined $4.16 to $45.87 at 4:15 p.m. in New York Stock Exchange composite trading. The shares have dropped 44 percent this year.

Plant Closures

Whirlpool will shutter its Jackson, Tennessee, plant shifting production to Findlay, Ohio. That will result in 500 job cuts. The company plans an additional reduction of 500 positions in North America and of 1,900 jobs overseas, mainly in Europe. The company has about 73,000 employees worldwide, it said today in a regulatory filing.

The company said that since January it has eliminated 2,000 jobs through the closure of four plants in LaVergne, Tennessee; Oxford, Mississippi; Puebla, Mexico and Reynosa, Mexico.

Full-year profit excluding some items will be $5.75 to $6 a share, the company said, down from previous forecasts of $7 to $7.50 and $8.50 to $9. Sales in the third quarter matched the average estimate of three analysts surveyed by Bloomberg.

Whirlpool reduced its free cash flow forecast for the year to at most $50 million. Its previous projection was for as much as $550 million. The appliance maker also suspended its share repurchase program, citing the lowered outlook.

Moody's Investors Service said it may downgrade Whirlpool's debt after the company cut its forecasts for earnings and free cash flow. Moody's currently rates the appliance maker's long- term debt and short-term debt two levels above junk.

The cost cutting will result in annualized savings of $275 million, Whirlpool said. Restructuring expenses will be $170 million in 2008, up from a previous estimate of $100 million, it said.

``Good companies will move quickly to get their costs down and position themselves for an extended downturn,'' MacGregor said. ``Whirlpool appears to be doing that, and management deserves credit for it.''

In July, the company raised its 2008 projection for the increase in the cost of steel, copper and other raw materials used to make appliances to as much as $650 million. Customers also deferred purchases as U.S. consumer confidence fell by the most on record in September.

To contact the reporter on this story: Carol Wolf in Cleveland at cwolf@bloomberg.net.

Last Updated: October 28, 2008 17:23 EDT