Whirlpool Corp. more than doubled its planned layoffs through next year to about 5,000 people as its profit fell 6.9% in the third quarter.The home-appliance maker also cut its earnings outlook, suspended its stock-buyback program and said it would raise prices further.
In a pointed sign of worsening economic conditions in the U.S., Whirlpool executives said some consumers are delaying replacing appliances that are beyond repair. Officials said such consumers eventually will buy the company's refrigerators, washing machines and other products because they are critical for maintaining a modern standard of living in the U.S.
But the Benton Harbor, Mich., company is uncertain enough about the global economy that it delayed forecasting its 2009 profit until early next year. "These are very challenging and volatile times economically around the world," Whirlpool Chief Executive Jeff Fettig said.
To cope with slowing sales, Whirlpool said it is cutting production in the U.S. and Europe by 20% in the fourth quarter and shutting plants in those two markets as well as Mexico. The pullback comes after the company reduced production by 10% in the third quarter.
The 5,000 layoffs include about 2,000 job cuts Whirlpool announced earlier this year amid plant closings. The jobs to be cut by the end of 2009 represent 7.3% of the company's work force.
While the moves might result in less price discounting because of shrinking inventories in company and retailers' warehouses, the pullbacks will lower productivity at the company's factories, as their full capacity isn't used.
The company cut its 2008 guidance for earnings from continuing operations to a range of $5.75 to $6 a share, from $7 to $7.50.
For several years, the company has been battling rising costs for steel, oil and other commodities. It has closed plants, laid off workers, redesigned its distribution system and undertaken other efforts to slash its costs. While integrating its business with Maytag, which it bought in 2006, Whirlpool has been pushing for price increases.
The company is now aiming to increase its prices on average by as much as 10% both in North America and world-wide. However, Mr. Fettig was circumspect about what the moves could yield, saying the impact of falling commodity prices is "not as positive as some of the recent headlines."
Whirlpool reported third-quarter net income of $163 million, or $2.15 a share, compared with $175 million, or $2.20 a share, a year earlier. Results from the prior year included a tax gain of $12 million. Net sales rose 1.2% to $4.9 billion.
