Whirlpool Corp. blamed a first-quarter revenue drop on a collapse in consumer confidence stemming from the war in Iran, an unusually blunt appraisal of the ripple economic fallout from the conflict that extends beyond oil and gas.
Shares of the iconic household appliance maker dropped 20% in premarket trading after the comments to investors.
“War in Iran resulted in recession-level industry decline in the U.S. as consumer confidence collapsed in late February and March,” the company said in an earnings presentation. The U.S. and Israel launched a military operation on Feb. 28 to prevent Iran from obtaining a nuclear weapon and curtail its missile program and support for terror proxies in the Middle East.
Oil prices rose after Tehran struck oil-producing Gulf nations and restricted traffic in the Strait of Hormuz, a critical oil transit chokepoint.
Gasoline is refined from crude oil, so Americans felt an immediate pinch at the pump.
The national average price of a gallon of gas stood at $4.56 on Thursday, up from $4.30 a week ago and about $3 per gallon at the start of the war, according to the AAA motor club.
Comments from Whirlpool suggested some consumers may be pulling back on large household purchases, even as companies like Disney say Americans continue to spend on travel and entertainment.
“The industry contracted about 7.4%,” Whirlpool Chief Financial Officer Roxanne Warner told Yahoo Finance. ”These are levels that last time you’ve seen was in the great financial crisis.”
Whirlpool cut its earnings guidance from $6 per share to $3-$3.50 per share.
Whirlpool Chairman CEO Marc Bitzer said the company expects to rebound, in part due to the impact of the Trump administration’s tariffs on foreign appliances.
“We acted decisively to address pricing and costs in the face of rapid deterioration in macroeconomic conditions,” Mr. Bitzer said. “Now, with Section 232 changes in favor of domestic manufacturers, Whirlpool Corporation is structurally positioned to win with our American-made products.”
Consumer confidence in the closely watched University of Michigan index tumbled to a record low in April, as the war in Iran dragged on.
Markets are starting to rebound, however, as Pakistan says the U.S. and Iran are reviewing a peace proposal. The price of Brent crude oil, an international benchmark, slid below $100 per barrel in recent days.
“It’s very possible that we’ll make a deal,” Mr. Trump said Wednesday in the Oval Office.
