By Zeba Fatima
According to the Whirlpool, CEO Jeff Fettig, global demand has been weak for whirlpool. He’s optimistic that a rebound in the U.S. housing market and consumers’ need to replace old appliances will boost sales during the next three to five years.
“This is another year, where we’re bouncing along the bottom in terms of demand from a recessionary level — down about 25 percent from the high in 2006.” he said .
The company is forecasting another 1 to 2 percent decrease this year as consumers make few discretionary appliance purchases.
Europe and Asia have also been weak, while Latin America has proven to be a strong market for Whirlpool.
Although looking out a bit further, Fettig is positive that a housing market will make a comeback and will raise product demand and more consumers will begin to replace appliances bought during the early part of the housing boom in 2003.
He told CNBC’s Squawk on the Street that” I really believe we have a significant amount of pent up demand today and we’ll get a catalyst from both housing and the replacement cycle over the next three to five years.”
However, Fettig did warn that any increase in taxes that erodes disposable income could put more pressure on consumers, who may continue to delay purchases of new dishwashers and washing machines.
The Whirlpool executive said in a statement that “Improvement in existing home sales will stimulate demand, but what the consumer will have to do is balance that with an overall added pressure if taxes are increased.”
Whirlpool has also been improving its operating margin by cutting fixed costs and improving productivity. Innovative new products have also helped.
Fettig stated that “Even in a difficult market, consumers will pay for innovation that has really helped our price mix quite a bit.” By 2014 Whirlpool expect these trends to continue and for its operating margin to increase above 8 percent.