Whirlpool lowers NorthAm guidance

Appliance maker Whirlpool has lowered its North American guidance to reflect industry expectations.

The company dropped its 2022 North American guidance by 5-7pc compared to previous estimates, which were flat, with expectations that second half performance will be similar to the second quarter.

Whirlpool reported that industry volumes were down by 6pc in the second quarter compared to the prior year. The appliance industry is a significant consumer of flat-rolled steel products, making up 5pc of shipments, according to US government data.

In April and May sales volumes dropped, leaving Whirlpool with increased inventories in June, forcing the company to cut production.

"We are adjusting production and inventory in line with what we see right now from industry forecast," chief executive Marc Bitzer said on an earnings call on 26 July. "Put it differently, we are correcting production — or we did already in June, and we'll continue to do so going forward, and we're not going to wait until year end."

The company said it will face additional 2022 headwinds as the increased price of steel and resins represent a $1.5bn-1.75bn additional cost for its raw materials.

Bitzer added that in June and July the economic picture turned toward recession and that the company is working with the mindset that an economic downturn is coming. Whirlpool will work to reduce its raw material costs, though Bitzer admitted that was unlikely to happen to the extent he would like it to in 2022.

The Argus US hot-rolled coil (HRC) Midwest ex-works assessment has averaged $1,247/short ton (st) in 2022, down from the average of $1,619/st in 2021. The average price was $594/st in 2020.

By Rye Druzin