- The U.S. based washing machine giant who was once in favor of stricter trade controls for its own industry.
- Whirpool shares plummeted Tuesday after executives blamed rising steel and aluminum costs for diminished quarterly earnings.
- Washing machines are one example of how tariffs can have unexpected and adverse effects on the domestic companies the policies attempt to protect.
Shares of Whirlpool, the U.S. based washing machine giant who was once in favor of stricter trade controls for its own industry, posted their worst day in over 30 years after executives blamed rising steel and aluminum costs for diminished quarterly earnings.
"Global steel cost has risen substantially and, particularly in the US, they have reached unexplainable levels," Whirlpool CEO Marc Bitzer told shareholders during a conference call Tuesday.
Whirlpool stock fell 14.5 percent Tuesday, its worst day since October 19, 1987.
The U.S. company was a major advocate for legislation to protect against what Bitzer last year called a "long story of dumping" by foreign competitors LG and Samsung in the washing machine business. Bitzer said during the company's fourth-quarter earnings call that the White House had "put an end" to this alleged dumping, saying it was "encouraging that finally trade laws are being enforced."
"As the next couple months unfold, we will see a lot more clarity" for how tougher trade laws will impact the Whirlpool's bottom-line, Bitzer said on Jan. 25.
Now the company cites U.S. tariffs on steel and aluminium as contributing to the increased cost in Whirpool's raw materials. Three months after calling the government's actions on trade an "incredible" outcome, Bitzer said on Whirlpool's first-quarter earnings call April 24 that costs "have risen substantially and, as a result, we're revising our raw material inflation guidance for 2018."
On Monday, Whirpool again raised its guidance for costs of steel and aluminum in its second-quarter report, while the company again adjusted its expected 2018 profits downward.
Bitzer at times on the call Tuesday downplayed the effects of the tariffs, saying the impact was "almost the same order" as impacts from a freight shortage in the second quarter. Instead, Bitzer focused on the price of steel.
"U.S. steel is 50 percent more expensive than the rest of the world and simply cannot be explained by the input cost," Bitzer said.
Washing machines are one example of how tariffs can have unexpected and adverse effects on the domestic companies the policies attempt to protect. Whirlpool also noted the hit taken by its suppliers.
"We are impacted by the tariffs, as we are an import of record of our suppliers who have to basically pay the tariffs," Bitzer said.
Bitzer expects "the U.S. industry to recover" in the second half of the year, but Whirpool still lowered its full year profit forecast. The company now expects 2018 adjusted earnings per share between $14.20 and $14.80, down from its previously guided range of earnings per share between $14.50 and $15.50, citing primarily the rising costs of steel and aluminium.