In Latin America, the IMF projects that the leading economies such as Brazil will grow in 2013 at a faster pace than in 2012: Brazil’s GDP will grow by 3% (year-over-year; in 2012 the growth rate was only 1.3%). In Asia, the IMF expects China’s GDP growth will exceed 8% in 2013 (in 2012, GDP grew by 7.8). Japan’s GDP will grow by 1.6% (in 2012, it was only 0.2%).
If these projections come through and if they also reflect growth in the appliances and electronics sector, than Whirlpool Corporation (NYSE:WHR) is likely to reflect this growth in its revenue in 2013.
Competition
The strong competition the company faces from leading brands such as General Electric Company (NYSE:GE) and Panasonic Corporation (ADR) (OTCMKTS:PCRFY) could keep Whirlpool from reaching its revenue goals for 2013. These companies also haven’t increased their sales in the first quarter of 2013: Panasonic’s revenue slipped by 1% (year-over-year); GE home and business solutions’ revenue remained nearly unchanged, while appliances’ net revenue increased by 3%.
On the other hand, GE’s operating profit rose in this segment, reaching 4%; meanwhile Panasonic’s operating profit in Q1 2013 reached 2%, an increase from the same quarter in 2012. This means Whirlpool’s operating profit is among the highest at 6%. For GE, the home and business solutions’ segment accounts for only 5.6% of total revenue. So GE has much “bigger fish to fry” and the appliances and electronics sector isn’t its prime interest as opposed to Whirlpool Corporation (NYSE:WHR)’s.
For Panasonic the recent developments in Japan, including the sharp depreciation of the Japanese yen, is likely to help pull up the company’s revenue. If the Japanese yen continues to depreciate against leading currencies including the Euro and US dollar, this could only raise the revenue of this company and increase the competition with Whirlpool Corporation (NYSE:WHR).
Takeaway
The strong competition from other leading appliances and electronics brands is likely to make it difficult for Whirlpool to reach its objectives in 2013. But if leading economies rise in 2013 as the IMF projects, this could be reflected in Whirlpool’s revenue growth. The company’s strong financial situation and rise in profitability are making it a solid investment. The next quarterly report will reveal if Whirlpool Corporation (NYSE:WHR) is back on track in terms of revenue growth.
The article Is Whirlpool Still a Good Investment? originally appeared on Fool.com.
Lior is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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