10-K: Whirlpool Reports $323 Million Net Loss for 2024, Cites European Deconsolidation and Maytag Impairment

Whirlpool's 2024 results were impacted by the deconsolidation of its European major appliance business and a Maytag trade name impairment, leading to a net loss despite cost-cutting measures.

Summary

• Whirlpool Corporation reported a net loss of $323 million for 2024, compared to a net profit of $481 million in the previous year.
• Net sales decreased by 14.6% to $16.607 billion, primarily due to the deconsolidation of the European major domestic appliance business on April 1, 2024.
• Ongoing earnings per share were $12.21, with a full-year ongoing EBIT margin of 5.3%.
• The company experienced a $381 million impairment charge related to the Maytag trademark.
• Cost optimization efforts resulted in approximately $300 million in savings.
• Cash provided by operating activities was $835 million, and free cash flow was $385 million.
• The company paid $384 million in dividends.
• Whirlpool reorganized its operating segments effective January 1, 2024, and is transitioning certain functional processes to a third-party partner in 2025.

Sentiment

Score: 4

Explanation: The document presents a mixed picture. While there are positives like cost savings and dividend payments, the net loss, sales decline, and impairment charges weigh heavily on the overall sentiment. The future outlook provides some optimism, but significant challenges remain.

Positives

• The company achieved approximately $300 million in cost savings through various optimization efforts.
• Free cash flow generation remained strong at $385 million.
• The company continued its 69th year of quarterly dividends, paying out $384 million.
• The company is committed to a 20 percent reduction in emissions linked to the use of our products (scope 3 category 11) across the globe by 2030, compared to 2016 levels.
• The company is committed to reach a net zero emissions target in its plants and operations (scopes 1 and 2) by 2030.

Negatives

• Whirlpool reported a net loss of $323 million for 2024.
• Net sales decreased by 14.6% compared to the previous year.
• The company incurred a $381 million impairment charge related to the Maytag trademark.
• The consolidated gross margin percentage decreased to 15.5% compared to 16.3% in 2023.
• The company received credit ratings downgrades by three major credit rating agencies during 2024.

Risks

• Intense competition in the home appliance industry could adversely affect business and financial performance.
• A loss of or substantial decline in volume of sales to key trade customers could adversely affect financial performance.
• Failure to maintain reputation and brand image could adversely impact business.
• An inability to effectively execute and manage business objectives and strategic portfolio transformation could adversely affect financial performance.
• An inability to understand consumers' preferences and to timely identify, develop, manufacture, market, and sell products that meet customer demand could adversely affect business.
• The ability of suppliers to deliver parts, components and manufacturing equipment to manufacturing facilities according to schedule and quality required may impact ability to manufacture without disruption and could affect product availability and sales.
• Risks associated with international operations may decrease revenues and increase costs.
• Risks associated with unanticipated social, political, economic and/or public health events, including epidemics and pandemics, may materially and adversely impact business.
• The impact of climate change and climate change or other environmental regulation may adversely impact business.
• We are exposed to risks associated with the uncertain global economy.

Future Outlook

Whirlpool anticipates approximately $8.75 GAAP earnings per diluted share for the year ending December 31, 2025, and expects to generate cash from operating activities of approximately $1 billion and free cash flow of approximately $500 to $600 million.

Management Comments

• The Company is committed to being the best kitchen and laundry company.
• The Company is driving purposeful innovation to meet the evolving needs of consumers through its iconic brand portfolio.
• The Company aims to position our brands as essential to many consumer segments by meeting their wide-ranging needs and aspirations.
• The Company has a culture of cost optimization and productivity, which we call productivity for growth, and it includes continuous focus on cost efficiency.
• The Company is committed to even further cost improvement, creating strong levels of value for our shareholders, regardless of the external environment.

Industry Context

The major home appliance industry is highly competitive, with companies like BSH (Bosch), Electrolux, Haier, Hisense, LG, Mabe, Midea, Panasonic and Samsung expanding their manufacturing footprints. The competitive environment includes the impact of a changing retail environment, including the shifting of consumer purchase practices towards e-commerce and other channels.

Comparison to Industry Standards

• Comparable companies in the major appliance industry include Electrolux, LG Electronics, and Samsung Electronics.
• Whirlpool's performance is being compared to global benchmarks in terms of revenue growth, profitability, and market share.
• The company is focusing on innovation, brand strength, and cost efficiency to maintain its competitive position.

Legal Proceedings

• The company is currently disputing certain income and indirect tax related assessments issued by the Brazilian authorities.
• The company is disputing certain income and indirect tax assessments in various legal proceedings globally.
• The second part of a French Competition Authority investigation, which is focused primarily on manufacturer interactions with retailers, is expected to be completed in 2025 with final payment to the authority.

Related Party Transactions

• Whirlpool China continues to sell Whirlpool -branded products through a licensing agreement in China.
• As part of the transaction with Arcelik involving the contribution of our European major domestic appliance business, we agreed to a multi-year licensing of the Whirlpool brand to the newly formed company for sales in Europe.
• In 2024, we reduced our ownership in Whirlpool of India from 75% to 51%, and we recently announced our intent to reduce our ownership stake to ~20% in 2025 via market sale.
• Whirlpool India holds a 97% controlling equity ownership in Elica PB India, following an additional acquisition of 10% equity interest during the third quarter of 2024.

Stakeholder Impact

• Shareholders: Impacted by the net loss and share price fluctuations, but benefit from dividend payments and potential future growth.
• Employees: Affected by workforce reduction plans and organizational changes.
• Customers: May experience changes in product offerings and pricing due to portfolio transformation and cost optimization efforts.
• Suppliers: Subject to potential disruptions and cost pressures in the supply chain.
• Creditors: Face increased risk due to credit rating downgrades.

Next Steps

• The company intends to reduce its ownership stake in Whirlpool India to ~20% in 2025 via market sale.
• The company will further evolve its business services model, transitioning certain functional processes to a third-party partner during 2025.
• The second part of a French Competition Authority investigation, which is focused primarily on manufacturer interactions with retailers, is expected to be completed in 2025 with final payment to the authority.

Key Dates

Keywords

Whirlpool, financial results, net sales, net loss, EBIT, impairment, cost optimization, dividends, operating segments, portfolio transformation, risk factors, forward-looking statements, major appliances, small appliances, sustainability