BENTON HARBOR — Appliance manufacturer Whirlpool Corp. has joined other publicly traded companies in withdrawing its 2020 earnings guidance, citing “unprecedented uncertainty” and concerns over disruptions related to coronavirus.
The company said in a statement Tuesday evening that it expects demand and production disruptions to act as a drag on its 2020 financial performance. As well, Benton Harbor-based Whirlpool (NYSE: WHR) said the effects of the virus could exceed $25 million to $40 million earnings before interest and taxes in the first quarter, above the company’s earlier estimates.
“Whirlpool is well prepared to successfully navigate through this difficult period,” Chairman and CEO Marc Bitzer said in a statement. “We have demonstrated strong fixed cost discipline, and initiated a large additional cost reduction initiative prior to the outbreak.”
Starting in January, the company initiated travel bans, remote work policies, line distancing and enhanced cleaning of its facilities. As well, Whirlpool also cut discretionary budgets, implemented tighter controls on working capital, and focused on reducing variable costs.
The spread of the disease has already disrupted the company’s operations, leading to reduced capacity in the U.S. and Latin America and temporary work suspension at facilities in Italy and India, as well as in China, which is “now back to near full capacity.”
In taking steps to bolster liquidity, Whirlpool started to borrow $2.2 billion from its revolving credit facility on March 13, with the proceeds going to fund commercial paper repayment and the company’s balance sheet. The company ended the 2019 fiscal year with about $2 billion in cash on its balance sheet.
“Over the years, we have made strategic decisions to strengthen our balance sheet and transform our company,” Bitzer said in a statement. “We believe these actions, coupled with our strong ability to generate cash flow, have positioned us well to not only cope with the current crisis, but also to win in the economic recovery."
The company expects to further detail the effects of the coronavirus in its next earnings call scheduled for May 1.