Whirlpool Corp. , the world’s largest maker of household appliances, is responding to “recessionary” demand in major developed markets by cutting jobs and manufacturing capacity, following a similar move by rival AB Electrolux.
Whirlpool will cut more than 5,000 positions, about a tenth of its workforce in North America and Europe, close a plant in Arkansas, and reduce its overall manufacturing capacity by about 6 million units.
The maker of Maytag and KitchenAid appliances, which slashed its annual profit forecast and reported weak quarterly results, has been hurt by high material costs and by shoppers cutting back on big-ticket buys such as washing machines and dishwashers.
“Given the weakening global economic environment, we are today announcing aggressive plans that will result in substantial cost and capacity reductions,” Chief Executive Jeff Fettig said in a statement.
Earlier, Electrolux, the world’s No. 2 appliance maker, said it would seek further cost cuts after forecasting that key markets would see declining demand this year.
Whirlpool, which employs 71,000 staff globally, expects industry demand in North America to fall more than it previously estimated, and it predicted no growth in shipments in Europe, the Middle East and Africa this year.
July-September adjusted profit was $2.35 (U.S.) a share, below the average analyst forecast for $2.68 a share, according to Thomson Reuters I/B/E/S.
“Our results were negatively impacted by recessionary demand levels in developed countries, a slowdown in emerging markets and high levels of inflation in material costs,” Mr. Fettig said.
Whirlpool now expects full-year profit of $4.75-$5.25 per share, down from its previous estimate at the low-end of $7.25-$8.25 a share.
The company will take a restructuring charge of about $500-million from the next quarter through 2013 related to the cost-cutting moves, which will remove $400-million from annual costs by end-2013.
Whirlpool shares were signalled down around 15 per cent in pre-market trade, after closing at an 8-week high of $60.47 in New York on Thursday.Report Typo/Error