Whirlpool 2005 Annual Report Download - page 25

Whirlpool Corporation 21
Executive Level Overview
Whirlpool Corporation is a global manufacturer of major home
appliances with 2005 revenues of $14.3 billion and net earnings of
$422 million. The Company’s four reportable segments are based
on geography and consist of North America (61% of revenue),
Europe (22% of revenue), Latin America (14% of revenue), and
Asia (3% of revenue). The Company is a leading producer of major
home appliances in North America and Latin America and has a
significant presence in markets throughout Europe, India and China.
Whirlpool received worldwide recognition for accomplishments in a
variety of business and social efforts, including leadership, diversity,
innovative product design, business ethics, social responsibility and
community involvement.
Overall Results of Operations
Net Sales The total number of units, which includes primarily
major and small appliances, sold in 2005 increased 1.3% over
2004. Consolidated net sales increased 8.3% over 2004. Excluding
currency fluctuations, net sales increased approximately 6%.
Total number of units sold in 2004 increased 4.9% over 2003.
Consolidated 2004 net sales increased 8.6% over 2003. Excluding
currency fluctuations, net sales increased approximately 6%.
Significant regional trends were as follows:
• In 2005, North America unit volumes increased approximately
1%, as compared to the 2004 period, reaching record levels.
Volume increases, driven by continued consumer demand for the
Company’s new product innovations, were partially offset by
lower OEM shipments. Net sales increased 8% during 2005, or
approximately 7% excluding currency fluctuations, to a record
$8.9 billion. The higher net sales were driven by the combination
of cost-based price adjustments and volume increases in the
Whirlpool and KitchenAid brands during 2005. In 2004, North
America unit volumes increased 4.6% as compared to 2003, due
to higher sales growth in Whirlpool and KitchenAid branded
products combined with strong Canadian performance. Net sales
increased 4.8% as compared to 2003, to $8.3 billion. Currency
fluctuations did not materially impact net sales comparisons.
• In 2005, Europe unit volumes increased 2.1%, reaching record
levels and outpacing industry growth. Solid demand for
Whirlpool branded products and continued strong performance
within the Company’s built-in appliance business drove the
increase. Net sales increased 3.2% to a record $3.2 billion in
2005. Currency did not have a material impact on sales during
the year. In 2004, Europe unit volumes increased 4.4%, ahead of
industry growth, as compared to 2003, driven largely by strong
Whirlpool brand performance and expansion of the Company’s
built-in appliance business. Europe’s net sales increased 13.8%,
or approximately 3% excluding currency fluctuations. Overall
market share improved due to Whirlpool brand performance and
new product introductions.
• In 2005, Latin America unit volumes increased 1.5% versus 2004,
due mainly to increases in the Brazilian appliance market. Net
sales increased 17.2% as compared to 2004, or approximately
6% excluding currency fluctuations, to $2.0 billion, due primarily
to increased unit volumes and cost-based price adjustments on
compressors and appliances. Strong demand for home appliances
in Latin America during 2004 resulted in a 14.9% increase in
unit volumes versus 2003. Economic conditions within Brazil
were strong during 2004, driven by GDP expansion, lower
unemployment and positive real wage growth. Net sales increased
24% in the region during 2004, and were approximately 20%
higher excluding currency fluctuations, due to market share
gains, strong volume, cost-based price adjustments and favorable
product mix.
•
In 2005 , Asia unit volumes increased 3.1% as compared to 2004 ,
driven mainly by industry growth and new product introductions.
Net sales improved
10.5% , or approximately 8% excluding
currency fluctuations, due largely to an improved product mix and
cost-based price adjustments implemented in
2005 . In 2004 , Asia
unit volumes declined
8.6% versus 2003, with a corresponding
decline in net sales of
8.2% . Excluding currency fluctuations, net
sales declined approximately
12% . Management’s decision to
implement a trade inventory reduction strategy in India negatively
impacted
2004 volume and sales. The strategy change improves
the speed, flexibility and overall efficiency within sales and
distribution processes, and enables the Company to launch new
product introductions more frequently and faster to the market.
Financial Summary
The following is a summary of the Company’s financial condition and results of operations for 2005 and 2004. For a
more complete understanding of the Company’s financial condition and results, this summary should be read together
with the Company’s Consolidated Financial Statements and related notes, and the “Management’s Discussion and
Analysis.” This information appears in the Financial Supplement to the Company’s Proxy Statement mailed with this
Annual Report and in the Financial Supplement to the 2005 Annual Report on Form 10-K filed with the Securities and
Exchange Commission, both of which are also available through the Internet at www.whirlpoolcorp.com.