Whirlpool Corp., the world's largest maker of household appliances, will cut production and axe about a tenth of its workforce in North America and Europe, as demand softens for big-ticket items like washing machines and fridges.
The maker of Maytag and KitchenAid appliances reported weak quarterly results and slashed its annual profit forecast, following its biggest rival, AB Electrolux, which said it would look to cut costs as demand declines in major markets.
Whirlpool will cut more than 5,000 jobs -- about one in 10 in North America and Europe -- close a plant in Arkansas, move another from Germany to Poland and reduce overall manufacturing capacity by about 6 million units.
Shares in the Benton Harbor, Michigan-based company dropped 10 percent in early trading on Friday.
Whirlpool, which employs 71,000 staff globally, expects demand in North America to fall more than previously estimated, and predicted no growth in shipments in Europe, the Middle East and Africa this year.
The company has been shifting business to emerging markets, but now expects growth in Asia and Latin America to slow, too.
This is a second straight quarter of disappointing results from Whirlpool -- seen as a benchmark for consumer appetite for expensive household goods. Its market value has dropped by more than a third to below $5 billion in six months.
Given the weakening global economic environment, we are today announcing aggressive plans that will result in substantial cost and capacity reductions, Chief Executive Jeff Fettig said in a statement.
July-September adjusted profit was $2.35 a share, below the average analyst forecast for $2.68 a share, according to Thomson Reuters I/B/E/S.
Our results were negatively impacted by recessionary demand levels in developed countries, a slowdown in emerging markets and high levels of inflation in material costs, Fettig said.
Whirlpool now expects full-year profit of $4.75-$5.25 per share, down from its previous estimate at the low-end of $7.25-$8.25 a share.
The company will take a restructuring charge of about $500 million from the next quarter through 2013 related to the cost-cutting moves, which will remove $400 million from annual costs by end-2013.
Two years ago, Whirlpool closed its manufacturing facility in Evansville, Indiana, with the loss of about 1,100 jobs.
(Reporting by Mihir Dalal in Bangalore; Editing by Gopakumar Warrier and Ian Geoghegan)