Weak pound and Brexit vote hit Whirlpool profits

Whirlpool Q4 profits were battered by a weak pound and reduced demand following the Brexit vote in the UK.

Whirlpool Europe, Middle East and Africa (EMEA) saw fourth-quarter net sales of $1.4 billion (£1.1bn), which was an eight per cent decrease over the $1.5bn seen in Q4 2015.

Ongoing business segment operating profit took a hammering and plummeted to $45 million (3.3 per cent of sales) from the $88m (5.7 per cent of sales) it achieved in the same period last year.

But when measured by the US’s Generally Accepted Accounting Principles (GAAP), EMEA Q4 operating profit was $17m (1.3 per cent of sales), falling from 2015’s $88m.

Whirlpool said margins were negatively affected by approximately $40m in the UK, thanks to currency and demand weakness associated with the Brexit decision. A production and inventory reduction also cost the corporation $10m.

However, Whirlpool said it expected full-year 2017 industry unit shipments to increase by one to two per cent.

For the group as a whole, net sales increased by over two per cent, from $5.6bn in Q4 last year to $5.7bn this year.

Fourth-quarter GAAP net earnings remained relatively flat at $180m. However, GAAP operating profit fell from $380m (6.9 per cent of sales) in Q4 last year, to $335m (5.9 per cent of sales) in Q4 2016.

Fourth-quarter ongoing business operating profit totalled £425m, or 7.5 per cent of sales, compared with $468m, or 8.4 per cent of sales in the same period last year.

For the full year to December 31, 2016, net sales totalled $20.7bn, falling slightly from the $20.9bn in 2015.

However, GAAP operating profit increased from the $1.3bn in 2015 to $1.4bn in 2016. Full-year ongoing business operating profit remained flat at $1.6bn.

Jeff Fettig (pictured), chairman and chief executive of Whirlpool Corporation, said: “We delivered our fifth consecutive year of record ongoing earnings per share through the continued execution of our long-term strategic priorities.

“We also continued to create value through our capital allocation strategy, funding our innovation programmes with strong levels of investment, while returning a record $800 million to shareholders through dividends and share repurchases.”