Whirlpool comments on the economy

Appliance manufacturer Whirlpool is one of the best barometers of the health of the global economy. Consumers buy home appliances when they're feeling good about their personal situation, so it's a worrisome sign.

Shares of the company were smashed 11% on Friday, the most in 4 years. They warned that FX and slow global growth will hurt the bottom line.

They placed most of the blame on emerging markets.

"Throughout this year in 2015, we've seen emerging market demand significantly decline," executives said.

They especially noted Brazil where inflation, FX and low commodity prices have "had a profound impact on Brazil's economy."

Interestingly, they said currencies have had a 'global reset'.

"Given the significant economic shocks this year, we believe that currencies have experienced a global reset, and we are prepared to operate in this changed environment going forward. Let me try to put this reset into perspective for you. Currency alone is expected to impact us by reducing our revenues by over $2.5 billion versus the last year, and have a negative $4 per share in earnings per share compared to last year. And the impact from declining emerging market demand will cost us an additional $1.75 per share. In total, currency and emerging market demands, fundamentally versus last year, has cost us $5.75."

Comments on other parts of the global economy:

  • They noted strong EMEA performance, "driven by the acquisition and continued recovery in the Western European demand."
  • In Asia "China has been slower in terms of market demand than we expected, it's around minus-4% right now."
  • India is a little bit different. We've had a couple of quarters of fairly strong market demand.
  • North American unit volumes were flat year-over-year
  • "The Eastern European market demand continues to be very slow and very much down, which is driven by Russia and Ukraine."
  • "On the Western European side, on the other side, I would say is stronger even than we anticipated."

Here is the full text of the conference call.