Whirlpool Corporation (WHR): Company Profile
Whirlpool Corporation (WHR): Company Profile
Monday, April 1, 2024
Ticker Symbol: WHR
Whirlpool Corporation’s Origins
Whirlpool Corporation was founded in 1911, and 2024 marks the company's 113th anniversary, which is a great accomplishment!
The company was incorporated in Delaware in 1955 and is currently headquartered in Benton Harbor, Michigan.
Whirlpool’s mission is to be the top kitchen and laundry company, globally, primarily through innovative products that make life exceptionally easier.
The company’s products include refrigerators, cooking appliances, freezers, washers and dryers, and dishwashers, among others.
At the end of 2023, the company had about 59,000 employees in 48 countries, with 23% of those employees in the U.S.
Whirlpool’s brands include KitchenAid, InSinkErator, Maytag, Amana, JennAir, Hotpoint, Indesit, and Consul.
Why has Whirlpool been so successful?
Many companies around the world manufacture kitchen, laundry, and home appliances; however, Whirlpool has found a way to stand out.
Whirlpool has found success due to its ability to consistently innovate the home appliances we use daily, in various ways.
The company has introduced several technology-embedded and energy-efficient appliances that have been well-received by many.
When it comes to technology, you can expect voice control (compatible with smart home assistants), food recognition (to help with knowing what’s in the refrigerator), and over-the-air updates.
The energy-efficiency factor has almost become a must for most electronics and appliances; however, it’s great that Whirlpool can combine both factors within its products.
Along with its superior products, Whirlpool’s manufacturing locations have helped it market and deliver products in a timely manner, which is huge when retaining customer loyalty.
As of December 2023, the company had manufacturing facilities in 10 countries, most of which are in the U.S. (11). Asia has the least with 6.
How does Whirlpool earn its revenue?
As expected, Whirlpool earns revenue by selling its products to retailers, who make up a significant part of its revenue, and individuals.
Whirlpool currently has 5 reportable segments, up from 4 in 2023, which were defined by geography.
The current segments are still defined by geography; however, the new segments are more consolidated now.
The 5 segments are Major Domestic Appliances (MDA) North America, MDA Europe, MDA Latin America, MDA Asia, and Small Domestic Appliances Global.
Let’s look at revenue!
Revenue Per Fiscal Year (FY)
FY 2020 - $19,456,000
FY 2021 - $21,985,000
FY 2022 - $19,724,000
FY 2023 - $19,455,000
Source Yahoo Finance
In its 2023 10-K, management notes that the third and fourth quarters tend to have the highest total revenue and operating margins, historically.
Whirlpool’s 2023 net sales decreased by 1.4% compared to 2022, and this decrease was due to the lower demand, although the acquisition of the InSinkErator business helped soften this, per the company’s 2023 10-K.
Net sales from 2022 saw a significant decrease of 10.3% compared to 2021, and this was a result of various factors.
According to the company's 2023 10-K, lower sales volumes and the divestiture of Whirlpool’s Russia business were major contributing factors to the decrease in net sales.
Despite the revenue drop, the company did have some positive highlights in terms of gross margin percentage. Gross margin percentage increased to 16.3% for 2023 compared to 15.6% for 2022.
This means the company is finding ways to reduce its raw material costs and cost productivity, which can help it maximize profits moving forward regardless of a drop in demand.
Specifically, North America's net sales have accounted for 59%, 58%, and 57% of its net sales for 2023, 2022, and 2021, respectively.
52 Week Stock Price Movement (as of 4/1/2024)
Hi – $160.62
Low – $98.40
Source: Market Watch
Whirlpool’s stock price closed at $118.93 on Monday, April 1st, 2024. The company’s stock price has seen a significant drop from its 52-week high for several reasons.
Dating back to late October 2023, the company lowered its guidance for the end of the year despite beating market expectations in the third quarter.
Between October 2023 and early December 2023, Whirlpool’s stock price hovered between $102 and $110 due to minimal company updates.
However, at the end of November 2023, Whirlpool announced the pending partial sale of its stake in Whirlpool of India in 2024, and this partially helped increase the company’s stock.
This helped increase Whirlpool’s stock because the sale proceeds were stated to be used to pay down part of the $500 million term loan the company took out.
These are the types of actions shareholders prefer to see: a company paying down its debt to focus on its most profitable areas.
Fast forward months later to late February, the company completed the sale of 24% of its India unit, which raked in $468 million for the company.
This brings us to March 2024, when the company’s stock is still hovering around the $110 range, primarily due to the current macroeconomic conditions.
With the uncertainty of exactly when rates will drop and gauging the overall demand for the company’s products, especially this first quarter, investors seem to be hanging on and not making huge changes that can impact the stock one way or another.
Whirlpool’s Strengths
1. Target Every Pocket Around The World
As noted in its 2023 10-K, Whirlpool’s global strategy targets developed countries and emerging markets through partnerships and individual efforts.
The idea is for Whirlpool to hold a first-to-market advantage over its competitors, a move that has proven to work, based on its leading position in many countries.
By consistently penetrating new markets, Whirlpool will further increase its brand recognition, a factor that’s vital for growth.
2. Consistently Innovating
To extend on a note made earlier, Whirlpool prides itself on introducing new products and states that it’s responsible for a “number of first-to-market innovations.”
For example, the company introduced the first electric wringer washer (1911), residential stand mixer (1919), and countertop microwave (1967), among other useful innovations.
Having a claim to such innovations helps the company market itself as a pioneer of the space and further instills consumer confidence.
3. Essential Everyday Products
This reason may sound extremely simple; however, it’s true and probably one of the most important. Most of the company’s products are needed daily.
Think refrigerators, dryers, washers, ovens, microwaves, and stoves. You may use many of these multiple times in a week, even in a day perhaps.
As long as Whirlpool remains a household name throughout the world, its products will always sell themselves due to the task the products complete.
Whirlpool – Reasons for Caution
1. Short-Term Contracts
The company’s contracts with its customers are “not long-term contracts,” per the company’s 2023 10-K, and this can cause issues when it’s time to renegotiate.
Whirlpool’s customers include vendors and suppliers. Management, in its 2023 10-K, noted that it has been unable to meet demand in the past because of such large contracts.
This negatively impacts the company’s revenue in the short and long term and can even cause the company to lose customers altogether.
2. Inherit Risks With Emerging Markets
A large part of Whirlpool’s expansion efforts includes entering emerging markets, both organically and through acquisitions.
Local business practices differ in every country, exposing the company to additional risks because it must adjust accordingly.
These risks can result in fines (for non-compliant practices) and unanticipated costs to conduct business in a respective country.
3. Risks With Overseas Revenue
For the 2023 fiscal year, 41% of net sales came from outside the North American region, and the company expects that international sales will continue to account for a significant portion of net sales.
With international sales, there are several risks that can affect revenue, risks such as foreign currency exchange rates, changes in foreign tax rules, and inflation and deflation in those countries.
Whirlpool’s management must be nimble so that it can deal with such risks since many can compound if left unresolved.
Investing in Whirlpool
Whirlpool has proven to be a staple in the kitchen and home appliance space and can provide steady returns for investors.
In addition to the company’s stock increasing, investors can also have the luxury of earning quarterly dividends, which help increase your overall return.
The company has paid quarterly dividends for 68 straight years, and in 2023, it paid out $384 million to shareholders alone.
While there is growth potential in the long-term, this doesn’t mean it’ll be smooth sailing, as the company does face various challenges daily.
In addition to the typical financial challenges every company faces, the challenges of entering new markets will be even greater.
What’s great is that Whirlpool has years of experience entering new markets, which will help make the learning curve less stressful.
Final Thoughts
Whirlpool has proven that it can be an innovator in an industry that most wouldn’t even think about as an investor, the appliances industry.
The company has done this all while achieving profits and consistently paying out quarterly dividends for decades.
There’s no doubt that Whirlpool’s dedication to innovating appliances will continue to help it change the appliance landscape.
Even with the positives Whirlpool has brought to the world, be sure to keep in mind the potential drawbacks of investing in the company.
Have you ever thought about Whirlpool as a potential investment? Why or why not? Would you consider investing in Whirlpool now?
Let us know your thoughts in the comment section below as we always look forward to reading what you have to say.
Thank you for reading, and remember to Stay Financially Invested!
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