Letter to
Shareholders
Chairman and Chief Executive Officer
2022–Special anniversary for Whirlpool Corporation
Our company was founded 111 years ago on November 11, 1911—making last November a “special anniversary” for us. At a time when the average lifespan of S&P 500 companies is less than 20 years, the longevity of our corporation certainly gives testimony to the sustainability of our business model and the loyalty, perseverance and spirit of winning demonstrated every day by our colleagues around the world.
As a result of these long-standing values, it is no surprise and yet also a tremendous honor to be ranked by Newsweek as #3 of America’s most responsible companies and by the Drucker Institute as #5 of 250 Best-Managed Companies. In addition, we increased nearly every score for our prioritized environmental, social and governance (ESG) rating agencies in line with our 2022 targets.
2022–Financially solid year, yet short of our expectations
Our 2022 financial performance was solid from a historical perspective. Our ongoing earnings before interest and taxes (EBIT) margin of 7% and free cash flow of $820 million are well in line with or above our long-term trends. Plus, our ongoing earnings per share (EPS) of $19.64 marks the second-highest on record—the last five years demonstrate the highest ongoing EPS in our proud history.
Yet we are not satisfied with our achievement and fell short of our own expectations. Much of this can be attributed to the extraordinarily challenging macroenvironment we faced in 2022 with accelerated inflation, the interest rate hike weighing on consumer sentiment and thus appliance demand, and lastly the war in the Ukraine. At the same time, our supply chain faced disruptions during the second half of 2022, which negatively impacted our shipments and market share, particularly in North America.
Faced with this unfavorable macroenvironment, we took strong and decisive actions to rebalance our inventories and initiate a major cost reduction program across all operations. While these actions did not yet fully impact our earnings in 2022, they give us confidence in an improved operational performance for 2023.
Last year also marked our 10th consecutive year of dividend increases and nearly the 70th consecutive year of dividend payments to our shareholders. Dividends together with share buybacks added up to more than $1.3 billion returned to shareholders, all while maintaining a solid balance sheet.
2022–Accelerated portfolio transformation
Last April, we announced plans for a transformation of our business portfolio toward higher-margin and higher-growth businesses. The rationale for this decision rests on two underlying considerations:
- The logic for a “global business model” has been evolving with geopolitical tensions, along with sustained rising logistics costs, leading to a slow but steady decoupling of the global operating environment.
- Not all businesses within our portfolio have been able to create returns sufficient to meet our long-term value creation goals. There certainly has not been a lack of effort to improve these businesses; it is rather a reflection of structural unattractiveness of some countries or our relative position in some of these areas.
In reality, our portfolio transformation has been taking place for a number of years with the sale of our Embraco compressor business and the partial divestiture of our China business. However, we recently accelerated this transformation with the acquisition of InSinkErator and the agreement to contribute our Europe, Middle East and Africa (EMEA) business into a new company with Arçelik (subject to regulatory approvals and closing conditions), where we will be a minority shareholder.
2023–Optimistic about strong underlying fundamentals
The challenges and headwinds we faced during 2022 will not magically disappear. Still, we see a more favorable operating environment slowly unfolding. Inflationary headwinds are starting to turn into tailwinds. Consumer demand will likely be depressed during the first half of 2023, but we expect a steady strengthening of consumer demand as the year progresses. Most importantly, we remain very upbeat about the mid- and long-term strength of the U.S. housing market, which is such a critical factor for our company’s performance. With a pent up demand of 2 million to 3 million homes and home affordability slowly improving, we expect the fundamental strength of this market to become visible toward the latter half of 2023 and into 2024.
Lastly, let me take this opportunity to thank you, our shareholders, for your continued trust in us. I also want to thank all of our 61,000 employees around the world for relentlessly working to improve life at home for our millions of loyal consumers.
Sincerely,
Marc Bitzer
Chairman of the Board and
Chief Executive Officer
