Whirlpool CEO: Housing Rebound, Pent-Up Demand to Lift Sales
While global demand has been weak for Whirlpool, CEO Jeff Fettig said on Friday he's optimistic that a rebound in the U.S. housing market and consumers' need to replace old appliances will boost sales during the next three to five years.
"This is another year, where we're bouncing along the bottom in terms of demand from a recessionary level — down about 25 percent from the high in 2006," said Fettig of the sluggish U.S. market. The company is forecasting another 1 to 2 percent decline this year as consumers make few discretionary appliance purchases.
Europe and Asia have also been weak, while Latin America has proven to be a strong market for Whirlpool.
But looking out a bit further, Fettig is optimistic that a housing market rebound will lift product demand. Plus, more consumers will begin to replace appliances bought during the early part of the housing boom in 2003.
"I really believe we have a significant amount of pent up demand today and we'll get a catalyst from both housing and the replacement cycle over the next three to five years," he told CNBC's "Squawk on the Street."
But Fettig did warn that any increase in taxes that erodes disposable income could put more pressure on consumers, who may continue to delay purchases of new dishwashers and washing machines.
(Read More: Cities With the Most Affordable Homes.)
"Improvement in existing home sales will stimulate demand, but what the consumer will have to do is balance that with an overall added pressure if taxes are increased," the Whirlpool executive said.
Whirlpool has also been improving its operating margin by cutting fixed costs and improving productivity. Innovative new products have also helped.
"Even in a difficult market, consumers will pay for innovation, that has really helped our price mix quite a bit," Fettig said. Whirlpool expect these trends to continue and for its operating margin to rise above 8 percent by 2014.