Whirlpool (WHR) Withdraws 2020 Guidance On COVID-19 Impact
Zacks Investment Research | Mar 24, 2020 09:56PM ET
Whirlpool Corporation (NYSE:WHR) withdrew its 2020 financial guidance, citing the uncertainty regarding the coronavirus pandemic, which is impacting global business and consumer activities. During its fourth-quarter earnings call, management expected adjusted earnings per share of $16-$17 for 2020.
Further, management borrowed $2.2 billion on Mar 13 from its current revolving credit facility, which will be partly utilized to fund commercial paper repayment. The remaining amount will be kept as cash balance or for funding additional commercial paper repayment, working capital and other general corporate purposes.
Other major retailers, including Aaron’s (NYSE:AAN) , Ross Stores (NASDAQ:ROST) and V.F. Corp (NYSE:VFC) , have also adopted similar moves, given the impact of COVID-19 on their businesses. Notably, Aaron’s withdrew its 2020 guidance in response to the ongoing COVID-19 outbreak and its unpredictable impacts. Further, management has drawn $300 million from its revolving credit facility to add to its cash balance. Ross Stores withdrew its top and bottom-line guidance for fiscal 2020 and the first quarter. Also, management has drawn $800 million from its revolving credit facility to add to its cash balance. V.F. Corporation also withdrew the guidance for fiscal 2020, given the growing uncertainty about the pandemic and its duration. Also, management strengthened its cash position by drawing $1 billion from its revolving credit facility.
Coming back to the news, the ongoing pandemic has led Whirlpool to witness challenging conditions and significant disruptions in its operations as the government ordered shutdown of various facilities. To this end, it lowered production capacity at manufacturing facilities across the United States, per the guidelines of the Centers for Disease Control. We also note that its facility at Amana has been shuttered following an employee tested positive for COVID-19.
Similarly, production has been reduced at the Joinville, Brazil, manufacturing facility, in sync with the guidelines. Further, Whirlpool has temporarily closed all operations at manufacturing facilities in Italy, which has led to logistic disruptions in the region. In the Asia Pacific, operations at all manufacturing facilities, particularly in India, remain suspended, while production in China has resumed.
Alongside disruptions in production, sluggish demand is anticipated to affect results. The company now foresees earnings before interest and taxes during first-quarter 2020 to be marginally higher than its earlier guided view of $25-$40 million.
Driven by such downsides, shares of this Zacks Rank #3 (Hold) company have slumped 42.7% compared with the Zacks Investment Research
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