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Rapid Changes in Global Markets is Whirlpool's Biggest Challenge: CEO


07/23/2016


Rapid Changes in Global Markets is Whirlpool's Biggest Challenge: CEO
Managing the rapid change and currency volatility in global markets such as the turmoil after Britain's vote to leave the European Union is the biggest challenge that Whirlpool Corp has had to face in the last year.
 
Chief Executive Officer Jeff Fettig of the company said this in an interview on Friday.
 
"The best example is Brexit and what has surprisingly happened in a short period of time, in the U.K., which impacted us but we were able to overcome it," Fettig said.
 
Britain voted to leave the European Union in a vote known as Brexit this summer and this is a market where Whirlpool records about $1 billion in revenues. Fettig said that the price of Whirlpool products had to be raised due to the fall in the value of the pound following the vote by Britain to leave the EU.
 
Fettig said that the fall in the value of the pound has resulted in a rise in the cost to import appliances from other European Union countries, where they are largely manufactured while a weak pound will reduce revenue and profit for the company. Hence the company will take a double hit – increased prices for components while reduced revenues.
 
"Local prices in the U.K. will go up. It is too early to say what impact it will have on demand, but we are assuming there could be a much weaker demand environment, at least for the short term," he said.
 
Fetting said that Whirlpool's leadership focused on adjusting to the changing global economic environment as the demands for its products from Russia and China slowed down.
 
Last year, Whirlpool faced a recession in Brazil, its largest Latin American market and the U.S. dollar strengthened against all major currencies.
 
Whirlpool posted a higher-than-expected quarterly net profit on Friday despite the global economic volatility.
 
"We had a record year last year, we had a record first half this year. We've been able to respond very quickly to changes in our market and environment, because that is the world we live in. So I feel very good about what we've been able to do over the last year," Fettig said.
 
From $2.70 a year earlier, the ongoing business earnings of the company per share rose to $3.50, Whirlpool said. According to Thomson Reuters I/B/E/S, analysts on average had expected the earnings per share to be $3.36.
 
While excluding currency exchange, the sale of the company rose 4 percent, Whirlpool said, while in Latin America, the sales fell 3.4 percent to reach $826 million.
 
"If the (Brazilian) currency stays where it is today, beginning mid-third quarter, we won't have anymore bad currency comparisons, so we would have finally lapped the bad news of last year," Fettig said.
 
The company focused on lowering costs, raising prices because of local inflation and investing in new products in Brazil even though Whirlpool's adjustments depend on the market.
 
(Source:www.reuters.com)