47 annotations
So there's 1 or 2 weeks later time. It could and will start impacting the European business. Right now, we're still in pretty good shape for Europe. But obviously, that brings uncertainty more in European supply chain, to much, much less extent of the North America supply chain.
some impact from red sea dsruptions
Transcript
2023 Q4
31 Jan 24
replacement market inherently comes with a slightly lower margin profile than discretionary demand.
replacement lower than discretioary demand
Transcript
2023 Q4
31 Jan 24
So I would say not necessarily in the first quarter, but more in the middle half of the year is when you should expect to see us reducing inventorie
inventory reduction in middle of year
Transcript
2023 Q4
31 Jan 24
nd so if you really look at how that $300 million to $400 million breaks down, the first $100 million of that is just cost savings we already implemented this year that are in areas that don't affect our ability to grow and drive innovation.
Then we talk about maybe the next $100 million to $200 million within there, and that's really driving efficiency both within our supply chain, our factories and that comes from ongoing initiatives that we have that are just to become much more efficient in terms of how we manufacture or much more efficient in how we get product to our consumers in the end.
And so again, those are not areas, those don't affect the investments that we make.
And then if you think about the third bucket there that we've talked about is really SG&A reductions from a simplified organizational model. That also is just us looking at how we operate as a company and how we operated in the past with a much larger business, including EMEA, how do we simplify it, how do we make it more effective?
colour on cost cuts
Transcript
2023 Q4
31 Jan 24
But the focus is on margin expansion, and that is in the context of we feel good about our share gains. And right now, the level of share where we come from gives us a solid base, and we will, at least for foreseeable future, will -- are focused on margin expansion.
margin expansion is the focus
Transcript
2023 Q4
31 Jan 24
we expect to exit '24 with around 10% North America margin.
exiting 2024 with 10% N/A margin
Transcript
2023 Q4
31 Jan 24
we continue to expect the transaction will close by April.
arcelik deal to close in April
Transcript
2023 Q4
31 Jan 24
we are confident in our ability to further reduce our net debt leverage to approximately 2x by 2026.
aim to reduce debt to 2x b y2026
Transcript
2023 Q4
31 Jan 24
Last year marked the 68th consecutive year of steady or increasing dividends from Whirlpool. Subject to Board approval, we expect a dividend of approximately $400 million.
We are committed to maintaining our strong investment-grade credit rating and reducing our debt by at least an additional $500 million.
cutting debt
Transcript
2023 Q4
31 Jan 24
We expect soft discretionary demand and higher retail inventory levels to weigh on total industry expectations in the first half of 2024, with a more pronounced impact on Q1.
We expect 2024 promotional activity to be at similar levels as the second half of 2023, creating a margin headwind to the first half of the year.
margin headwind in H1, more pronounced in Q1
Transcript
2023 Q4
31 Jan 24
discretionary demand, which accounts for approximately 25% of total industry volumes is driven by existing home sales which are coming off their worst year since 1995 and are expected to improve in the back half of 2024 as interest rates moderate
discretionary demand around 25% of market
Transcript
2023 Q4
31 Jan 24
Replacement demand drove industry growth in 2023, and we expect this trend to continue into 2024. The last 4 years of elevated usage is shrinking the historical average life of appliances, coupled with an installed base from 2015 through 2017 that grew 4% to 5% and is nearing replacement. This is driving replacement demand to approximately 60% of industry volumes.
We expect to continue to drive value-creating share gain in 2024. With housing starts trending higher in the second half of 2023, Whirlpool is disproportionately positioned to benefit from new construction demand.
Forecast for 2024 are calling for low to mid-single-digit growth in housing starts, most likely benefiting Whirlpool in the second half of 2024 or 2025.
support comes from replacement demand due to extensive usage of appliances
Transcript
2023 Q4
31 Jan 24
For MDA North America, we expect to deliver full year margins of approximately 9%, with promotional carryover negatively impacting first half margins and elevated channel inventories impacting first quarter demand.
first half margins hit by promotonal activity
Transcript
2023 Q4
31 Jan 24
We expect a negative impact of 150 to 175 basis points from price mix. This reflects the first half of 2024 carryover effect as the promotional environment normalized in the second half of 2023.
We also expect continuing softer mix and discretionary demand in the first half of 2024 from historically low existing home sales, partially offset by new product introductions.
As we drive further reductions to our cost structure, we expect approximately 175 basis points of net cost margin benefit from $300 million to $400 million of cost takeout actions.
We expect minimal to no impact to EBIT margins from raw materials this year based on recent commodity trends and executed supply agreements.
cost to offset promotional proce mix headwinds
Transcript
2023 Q4
31 Jan 24
We expect flat 2024 net sales, including $700 million of sales from the EMEA major domestic appliance business in Q1 and flat the EBIT margin year-over-year on a like-for-like basis.
We expect 2024 free cash flow of $550 million to $650 million, a 50% to 75% increase driven by improved earnings and working capital reduction.
We expect full year ongoing earnings per share of $13 to $15, including an adjusted effective tax rate of 0%, an increase compared to 2023 and which impacts 2024 earnings per share by approximately $1.
guidance -- flat ongoing sales
Transcript
2023 Q4
31 Jan 24
As you may have seen, we recently announced our intention to sell up to 24% of Whirlpool India's outstanding shares while retaining a majority interest.
We truly believe in the long-term trajectory of India. It is one of the strongest growth opportunities for Whirlpool. Whirlpool of India's long-term outlook for growth and margins are both in the high single digits, making India very attractive to operate in. At the same time, this financial profile has created a very strong local public market valuation.
selling 24% of whirlpool india
Transcript
2023 Q4
31 Jan 24
On the cost side, we have put actions in place to deliver $300 million to $400 million in cost savings.
While this number may appear lower than in 2023, we're not factoring any raw material savings.
So with $300 million to $400 million are all structural cost takeout actions.
The margin expansion will essentially be driven by the benefits of a refocused portfolio after the completion of EMEA transaction as well as a very disciplined approach focused only on value-creating promotions and product mix.
300-400 cost reductions
Transcript
2023 Q4
31 Jan 24
While we already see a gradual and steady recovery of new home orders and starts, we all know that these trends typically need 6 to 9 months to turn into appliance sales. The existing home sales market, on the other hand, will need a catalyst to unfreeze. That catalyst can only be a return to lower mortgage rates which we expect to moderate as the year progresses.
how the market will recover
Transcript
2023 Q4
31 Jan 24
nd while our full year EBIT margin of 6.1% is solid, it is still more than 1 point short of where we wanted to be. And we were not able to reduce our inventories fast enough, which negatively impacted our full cash flow.
Obviously, these results were impacted by a still unfavorable housing cycle in 2023. The rapid and steep increase of U.S. mortgage rates led essentially to a freeze of existing home sales. Ultimately, this resulted in the lowest existing home sales in almost 3 decades.
missed margi target and cash flow due to weak housing market
Transcript
2023 Q4
31 Jan 24
So roughly less than half of that is raw materials and the other ones are really true cost takeout be it in logistic costs or in product and reengineering, et cetera.
cost cutting
Transcript
2023 Q3
12 Jan 24