Whirlpool Says Profit Will Miss Forecasts

Whirlpool Corp. said Wednesday that it plans to cut as many as 6,000 jobs, or 10% of its work force, and warned that fourth-quarter profit would miss analysts’ estimates because of declining sales and higher costs for materials.

The biggest U.S. maker of appliances said the job reductions will contribute to charges of $300 million to $350 million against next year’s earnings.

Chief Executive and Chairman David Whitwam said the drop in the appliance industry’s shipments has been “far more pronounced” than forecast. Industrywide, shipments in North America are expected to decline 7% to 8% in the fourth quarter, the company said.

Whitwam said that the exact number and timing of the job cuts has not yet been determined.

Whirlpool is the latest of several large companies to plan job cuts as U.S. economic growth slows. Consumer confidence in October fell to its lowest level in a year and factories have begun reporting declines in orders and production.

Whirlpool, whose brands include Kenmore and KitchenAid as well as Whirlpool, lost sales and a major distributor when Circuit City Group decided in July to stop selling appliances.

Rather than link with low-price chains such as Wal-Mart Stores Inc. and Home Depot Inc., Whitwam has pursued selling at Sears, Roebuck & Co., Best Buy Co. and regional appliance chains that prominently feature Whirlpool products and have knowledgeable, well-trained staffs.

Sears is Whirlpool’s largest customer and the biggest U.S. appliance seller, with 38% of the $17-billion-a-year appliance market.

Wal-Mart and Home Depot recently reached exclusive marketing agreements with General Electric Co. and Maytag Corp. to sell their appliance at prices 3% to 4% less than at Sears.

Price competition and lower appliance sales will continue into next year, Whirlpool said.

The company expects earnings for its fourth quarter and its first quarter to be about the same as the 98 cents a share it reported for its third quarter. Whirlpool was expected to earn $1.42 a share, the average estimate of eight analysts polled by First Call/Thomson Financial.

Whirlpool said it plans to reduce its selling, general and administrative costs by $100 million during the next two years. The worldwide restructuring will be completed by the end of 2002 and is expected to save $225 million to $250 million a year, the company said.

Shares of Benton Harbor, Mich.-based Whirlpool fell $2.75 to close at $41.44 on the New York Stock Exchange.