Whirlpool’s First-Quarter Profit Rises, Helped by U.S. Energy Tax Credits
Whirlpool Corp. (WHR), the world’s largest appliance maker, said first-quarter profit increased 3 percent, helped by an energy tax credit.
Net income rose to $169 million, or $2.17 a share, from $164 million, or $2.13 a share, a year earlier, the maker of KitchenAid refrigerators and Maytag washing machines said today in a statement. Revenue gained 3 percent to $4.4 billion, surpassing the $4.29 billion predicted by analysts. Profit was $2.11 a share, excluding some items, topping the $1.16 median estimate in a Bloomberg survey. Operating profit declined.
Sales at Whirlpool, based in Benton Harbor, Michigan, recovered last year after the company gained market share and benefited from U.S. tax credits for making energy-efficient appliances. Jeff Fettig, chairman and chief executive officer, is also expanding business in emerging markets such as Brazil, with about half of the company’s sales coming from North America last year.
“Our first-quarter results reflect our ongoing cost reduction efforts and continued innovation investments, which helped to mitigate significant material cost inflation,” Fettig said in the statement today.
Whirlpool reaffirmed its profit estimate of between $12 and $13 a share this year, helped by between $300 million and $350 million in energy tax credits. The company said in February that it expected to receive $300 million in energy tax credits this year. Fettig told analysts today that the higher number was based on “better visibility” after monitoring sales of qualifying models.
Whirlpool rose 79 cents, or 0.9 percent, to $88.65 at 4:01 p.m. in New York Stock Exchange composite trading. The shares are little changed this year.
Research and Development
Whirlpool plans to spend more than $600 million on research and development and will open a plant and distribution center in Tennessee and a new headquarters in Michigan with $1 billion in U.S. investment through 2014, Fettig said in a speech in Detroit last month.
Founded a century ago, Whirlpool bought smaller Maytag Corp. in 2006 for $2.6 billion to compete with appliance makers in Asia.
After closing nine factories in North America since the merger, the company still operates nine plants in the U.S., with about 17,500 workers, and says 82 percent of the units sold in the U.S. are domestically made. Whirlpool can claim the tax credit only for appliances produced in the U.S.
Globally, Whirlpool employs 71,000 people.
Sales at the appliance maker rose 7 percent to $18.4 billion last year after dropping during the housing slump of the previous two years. In the year-earlier quarter, the company attributed a rise in revenue to increased productivity.
Whirlpool had negative effective income tax rates in 2010, 2009 and 2008. Last year, the company reported an income tax benefit of $64 million and an effective tax rate of negative 10.9 percent, according to company filings. The company expects a similar tax benefit in 2011, corporate controller Larry Venturelli told analysts today.
Electrolux, based in Stockholm, is accruing the credits for future use against its U.S. tax liability, chief financial officer Jonas Samuelson told analysts on a call today.
“We have the same opportunities for tax benefits that are quite similar to Whirlpool when it comes to energy tax credit, however, we can’t realize them to earnings to the same extent,” he said.
Congress created the appliance manufacturing tax credit in 2005. It was extended for a year in December in a broader tax law. The congressional Joint Committee on Taxation estimated that a one-year extension would cost the government $235 million in forgone revenue over the next decade. That’s higher than the $78 million estimate it issued last year, before officials realized how much of a benefit the credit provides to Whirlpool.
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