Whirlpool,supporter of early tariffs on appliances, say steel tariffs are hurting them bad

quote:

---

Whirlpool Corp. WHR -0.72% on Monday trimmed its full-year profit outlook as it booked a large charge on its European operations and said it wouldn’t be able to offset the effect of steel tariffs with higher prices for consumers.

The Benton Harbor, Mich-based appliance maker swung to a second-quarter loss after booking $747 million in charges on its European business and paying $114 million for an antitrust settlement in France, wiping out the benefits of higher prices pushed through to counter the effect of tariffs on imports of steel, one of its largest costs.

Whirlpool said it has struggled to integrate its 2014 purchase of Italy’s Indesit Co. and faced economic and operational issues, as the company worked to gain more exposure to Europe’s appliance market. The total consideration paid was $1.4 billion in aggregate, net of cash. The asset impairment represents about half of the original purchase price.


The surprise charge follows a series of upbeat earnings reports by other U.S. manufacturing and machinery makers, with buoyant housing and energy markets helping drive a series of better-than-expected earnings and higher full-year profit forecasts.

Whirlpool bucked that trend and its shares fell more than 8% in after-hours trade Monday, with executives likely to be quizzed by analysts on a call Tuesday about the effect of the charge on its stock buyback and investment plans.

The company said Monday it now expects to pay about $350 million more this year from rising raw-material costs as it faces “a very challenging cost environment.”

Total sales in the quarter fell 3.9% to $5.14 billion. They were down 4.5% from a year earlier after excluding currency changes.

A sales drop of 2.2% in North America came as Whirlpool and rivals such as Electrolux AB pushed through price increases to offset the steel tariffs and held back from big discounts during holiday sales, according to analysts. Retail prices of washers and dryers are up 20% in the latest quarter from a year earlier.

Whirlpool supported import tariffs on appliances produced overseas but much of the benefit was countered by the effect of levies on steel imports introduced earlier this year.

---