The improvement in earnings was mainly driven by the company's sustained focus on cost and capacity reduction initiatives, encouraging price/mix and gains from the integration of acquired assets.
On a reported basis, the company's earnings climbed 2.4% to $2.28 per share from $1.02 per share earned in the prior-year quarter.
Revenues came in at $5,560 million, down 7.4% from the comparable year-ago quarter and also below the Zacks Consensus Estimate of $5,714 million. On a currency-neutral basis, Whirlpool registered year-over-year sales growth of nearly 4%, mainly on the back of contribution from acquisitions.
Adjusted operating profit in the quarter rose 2.6% to $468 million from $456 million in the year-ago quarter, while operating margin expanded 90 basis points (bps) year over year to 8.5%. Operating results improved on gains from acquisition integration activities, ongoing cost and capacity reduction initiatives, favorable price-mix and cost productivity, slightly offset by unfavorable foreign exchange rates, lower demand in emerging markets and higher marketing, technology and products related investments.
Regional Performance
Revenues from North America were up 3.6% year over year to $2.9 billion, while revenues grew 6% on currency-neutral basis. Adjusted operating profit increased 41.6% year over year to $361 million, while operating margin expanded 350 bps to 12.5%. During the quarter, gains from ongoing cost productivity and improved price/mix overshadowed the negative impact of unfavorable foreign exchange rates. The company expects its North American industry shipments to increase by 5% in 2016.
Revenues from Latin America declined 38.5% year over year to $0.8 billion. Excluding the negative effects of currency translation, revenues dropped 8%. Adjusted operating income of $58 million deteriorated substantially from $149 million reported last year, as better product price/mix and gains from cost and capacity reductions were more than offset by adverse currency impact and lower unit volumes due to weak demand in Brazil. The company expects industry unit shipments in Latin America to be down by nearly 10% in 2016.
Revenues from EMEA declined 11.8% to $1.5 billion from $1.7 billion reported in the prior-year quarter. However, on a currency-neutral basis, revenues at the segment rose 8%. Fourth-quarter adjusted operating income was $88 million, compared with $101 million in the year-ago quarter. Whirlpool expects industry unit shipments in 2016 in the range of flat to 2% increase.
Revenues from Asia grew 10.6% to $312 million in fourth-quarter 2015 from $282 million in the prior-year quarter. Excluding currency effects, revenues increased 15%. Adjusted operating profit was $11 million, as against $17 million reported a year ago. The company expects industry shipments in the region to be flat in 2016.
Financial Position
Whirlpool had cash and cash equivalents of $2,530 million as of Dec 31, 2015 and long-term debt of $3,470 million.
This largest home-appliances manufacturer in the world generated $1,225 million of cash in operating activities in 2015. Meanwhile, the company's capital expenditure in the period was $689 million. As of Dec 31, 2015, Whirlpool had free cash flow of $620 million.
Guidance
Following the results, Whirlpool provided its full-year 2016 earnings guidance, projecting GAAP earnings in the range of $11.25-$12.00 per share, while earnings from ongoing business is envisioned in the band of $14.00-$14.75 per share.
The company also expects free cash flow in the range of $700 million to $800 million for 2016. This guidance includes restructured cash outlays of up to $200 million and capital expenditures in the range of $700-$750 million.
Currently, Whirlpool carries a Zacks Rank #2 (Buy).
Other Stocks Worth a Look
Some other favorably ranked stocks in the retail sector include Electrolux AB
ELUXY
LBY
DOOR
By: Zacks Equity Research (zacks.com).
Review: Emerging Market Formulations & Research Unit, Flagship Records.
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