Shares in domestic appliance company Whirlpool (WHR -0.98%) slumped by more than 16% in the week to Friday morning. The move comes after the company released its second-quarter earnings on Tuesday. The results surprised the market, but it's more surprising that the market was surprised.

Whirlpool's unsurprising, surprising results

After a first quarter where Asian competitors rushed to import products ahead of potential tariffs, it was no surprise to see the same again in the second quarter after President Donald Trump agreed to a 90-day pause on higher rates of tariffs in April so that negotiations could take place.

The pre-loading of products in the marketplace, combined with enduring weakness in the appliance market -- particularly in higher-margin discretionary appliances driven by existing home sales -- created intense promotional activity, which in turn led to Whirlpool's margins suffering accordingly in the second quarter.

As a result, management cut its full-year guidance to earnings per share of $6 to $8 compared to $10 previously, and free cash flow of $400 million compared to $500 million to $600 million.

Dividend cuts, stronger balance sheet, long-term recovery

Management also sensibly cut its annual dividend to $3.60 per share from $7 previously, and still plans to pay down $700 million of debt (Whirlpool has $6.2 billion in long-term debt) in 2025. Management also refinanced $1.2 billion in maturing debt, as it seeks to strengthen its balance sheet.

Image source: Getty Images.

Thinking longer-term, Whirlpool stands well placed to benefit from the tariffs on Asian imports, and it's highly likely to be a net winner from the Trump administration's approach, but that won't be apparent until after its competitors run down the inventory they pushed into the market in the second quarter.