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Whirlpool India sees costs, rate hikes pressuring growth

Whirlpool India sees costs, rate hikes pressuring growth
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First Published: Tue, May 17 2011. 06 32 PM IST
Updated: Tue, May 17 2011. 06 32 PM IST
Mumbai: Consumer durables maker Whirlpool of India, the Indian unit of global appliances maker Whirlpool Corp , sees earnings growth pressured in 2011/12 as a surge in input costs and successive interest rate hikes are expected to dent demand, a top official said.
“We are expecting to clock in revenue growth of around 20%.... Most of the overall growth will be value growth as volume growth is seen under pressure,” Shantanu Dasgupta, vice president, corporate affairs and strategy told Reuters.
The Reserve Bank of India this month raised its key interest rates by a larger-than-expected 50 basis points to battle stubbornly high inflation, its ninth rate increase since March 2010.
High inflation dents demand for consumer durables such as refrigerators, washing machines and air conditioners as it hurts the spending power of consumers.
About 15-16 people out of every 100 who purchase consumer durables opt for financing, Dasgupta said.
The company which is reeling under the pressure of surging input costs said price rise has been a continuous process since last year but did not divulge any details on the next pricing action being planned.
“Prices have risen all across the board. Crude, crude-linked inputs, the entire metals complex including copper, steel, aluminium,” Dasgupta said.
The company said it plans to maintain EBITDA margins between 10-12% in FY12. The company ended the last fiscal year with EBITDA margins of 10.7%.
Earlier in this month, the company had posted an 18% on-year decline net profit in Jan-March to Rs 47.17 crore and 7% rise in net sales to Rs 594 crore.
The company, however, closed FY11 with a 15% jump in net profit to Rs 166 crore on a 22% increase in sales to Rs 2612 crore.
The durables maker, which is optimistic about long-term growth prospects in India, said it plans to invest Rs 600 crore over the next three years in the country.
Whirlpool will invest Rs 180-200 crore in the current fiscal year in India, which will include promotional spend and regular capital expenditure along with new product launches.
It plans to launch a new range of cooking appliances in FY12 and is also planning to raise its refrigerator capacity in FY13, Dasgupta said.
Shares of the firm ended down 1.85% at Rs 243.45 in a weak Mumbai market.
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First Published: Tue, May 17 2011. 06 32 PM IST