Our first quarter results reflect the positive benefits from our previously announced price increases, which we initiated to mitigate the significant increases in raw material and oil-related costs
Jeff M. Fettig, Chairman, President and CEO, Whirlpool

Whirlpool Corporation announced first quarter 2005 net earnings of $86 million, or $1.26 per diluted share, compared to $101 million, or $1.43 per diluted share, in the same period last year. The decline was driven by significantly higher material and oil-related costs.

"Our first quarter results reflect the positive benefits from our previously announced price increases, which we initiated to mitigate the significant increases in raw material and oil-related costs," said Jeff M. Fettig, Whirlpool's chairman, president and chief executive officer. "The results of pricing actions over the first three months of this year, including product and brand mix, were in line with expectations. Our operating results were significantly impacted by approximately $190 million in higher material and oil-related costs compared to the prior year's quarter. We were able to mitigate most of this through global price increases, productivity improvements, cost controls and a lower effective tax rate."

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Whirlpool North America operations delivered record first quarter revenue. Sales of $1.98 billion increased 4.5 percent from the prior-year period, as price increases ranging from 5-to-10 percent across product lines were implemented. For the quarter, industry shipments for major appliances are estimated to have declined by approximately 2 percent, due primarily to fewer shipping days in the current period and trade inventory reductions. Price increases, productivity improvements, and strong cost controls helped mitigate higher costs. Operating results declined 14 percent to $182 million year-over-year, due primarily to significantly higher material and oil-related costs.

Based on current economic conditions, the company continues to expect full-year industry unit shipments in 2005 to increase approximately 2 percent.

Outlook

"The challenging cost environment we are experiencing is evolving as expected," said id Fettig. "Material and oil-related costs are expected to increase between $500-to-$550 million during the current year. We continue to execute global price increases, and are aggressively implementing plans to drive higher levels of controllable productivity, reduce non-product related spending and accelerate the introduction of new products. We will continue to focus on these four priorities in all markets around the world. Based on our assessment of the current environment, we continue to expect full-year earnings-per-share of $5.90-to-$6.10, and free cash flow to be in the $250-to- $300 million range."