February 4, 2015 / 7:24 PM / 3 years ago

Whirlpool could take $1 billion revenue hit from strong dollar: CEO

Jeff Fettig speaks at the Reuters Retail and Consumer Summit in New York June 20, 2007. REUTERS/Jamie Fine

CHICAGO (Reuters) - If the U.S. dollar stays at current levels, Whirlpool Corp’s (WHR.N) revenue could take a hit of up $1 billion in 2015, but the world’s largest appliance maker expects to protect its profits, Chief Executive Officer Jeff Fettig told Reuters on Wednesday.

Raising prices in some foreign markets should offset some of the effects of the strong dollar, which reduces the value of goods sold overseas, he said.

Fettig said Whirlpool would also benefit from lower commodity prices and cost reductions from restructuring its two recent acquisitions.

Earlier on Wednesday, Whirlpool reported 2014 revenue of $19.9 billion and said it expected sales in the U.S. market, its largest, to rise between 4 percent and 6 percent in 2015.

Fettig said there were a number of reasons to be optimistic about the U.S. market.

U.S. appliance sales peaked a decade ago, before the Great Recession. The average lifespan for many of the products Whirlpool makes - washers, dryers, cooktops, stoves and refrigerators - is also about 10 years.

“We’re bumping up against replacement demand,” Fettig said.

The U.S. housing market is in the middle of a multiyear housing recovery, Fettig said. “It still has a long way to go,” he said, “but the market is recovering in a manageable way.”

New homes mean new appliances, a boon for Whirlpool.

While falling oil prices are saving consumers money at the pump, Whirlpool is hoping that increased employment and a growing economy will lead to a long-term boost in discretionary spending.

“We need to see the average household income rise,” Fettig said.

According to the U.S. Bureau of Labor Statistics, private-sector wages and benefits ticked up 0.6 percent in the fourth quarter, a sign that higher incomes may be on the way.

Fettig said the European market, now a close second in size after the acquisition of Italian appliance maker Indesit, has not recovered but appears to have stabilized. Whirlpool is expecting sales in Europe to be flat to up 2 percent this year.

“We’re less pessimistic about Europe,” he said. “But I wouldn’t say we’re optimistic yet.”

Reporting By Nick Carey; Editing by Lisa Von Ahn

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