Whirlpool (WHR) says inflation in commodities such as resin will carry a hefty price tag of $1 billion this year.
Despite the inflationary profit headwind, the appliance making giant is not only significantly profitable right now but also seeing a long runway for further profit growth. Credit for that goes to Whirlpool continuing to fine tune its supply chain (a hallmark of Whirlpool) and also taking 5% to 12% price increases earlier this year amid a hot market for appliances.
"We have raised prices across the globe and we feel we are in a pretty good position to mitigate the effects of raw materials," Whirlpool Chairman and CEO Marc Bitzer said on Yahoo Finance Live. Bitzer said the company — at least for now —isn't eyeing more price increases as it expects inflation to subside in 2022.
"Right now we feel like we are in a good position to deal with what we saw coming," Bitzer added. "We have been pretty predictable in terms of raw materials and pretty stable in terms of our outlook."
The company has also been pretty predictable in its earnings releases in 2021, notching big gains in sales and profits globally as the pandemic has pushed people to invest in their homes. Whirlpool reported Wednesday evening that second quarter sales and core earnings rose 31.7% and 220.8%, respectively, from the prior year.
Here is how Whirlpool performed compared to Wall Street profit forecasts for the second quarter:
Net Sales: $5.32 billion vs. $5.03 billion
Diluted EPS: $6.64 vs. $5.90
Shares of Whirlpool fell slightly in Thursday trading amid some profit-taking on the much better than expected quarter. The stock is up 47% over the past year versus a 33% gain for the S&P 500, per Yahoo Finance Plus data.
Whirlpool is staying optimistic on the balance of the year even as it deals with ongoing strong levels of demand that is still placing pressure on the product availability. The company lifted its full year sales outlook to 16% growth from 13%. Full year earnings are pegged at $26 a share, up from a range of $22.50 to $23.50 a share previously.
Regarding issues with supply availability, Bitzer said, "we don't feel good, we are letting consumers down."
"They need new appliances because for many people right now they have been using appliances a lot more in the last year than any time before," he added. "You have high consumption. People need to replace certain appliances and we of course, feel really bad about having so many consumers waiting for our appliances."