During the year, we completed two very important acquisitions that contributed to our record results in 2014 and create an even larger platform for growth in the future. Our investments in our brands and products generated more than 70 new product launches that have set the stage for future years of margin expansion. We effectively managed through volatility and headwinds in emerging markets and continued our focus on driving benefits through ongoing cost productivity programs.
As a result, we created value for our shareholders as our stock finished the year at an all-time high in December and over the last three years, total shareholder return was 335 percent. We increased quarterly dividends on the company’s common stock by 20 percent and repurchased $25 million of shares under the current share repurchase program that has $475 million in authorized funds remaining.
NEW GLOBAL GROWTH PLATFORM
As we turn the page to 2015, we expect to be an even larger global branded consumer products company with substantial earnings and free cash flow growth. We have a fundamentally different platform for growth than we did a decade ago with four value creating regions, seven brands that generate more than $1 billion in revenue, truly global earnings diversification and unprecedented global scale. We are now No.1 in North America, Europe, and Latin America, and the No.1 Western Company in Asia.
At our Investor Day in December, we laid out strong value creation targets through 2018 as we continue to grow our core appliance business, expand our adjacent businesses and drive acquisition cost synergies of nearly $400 million, resulting in:
- Growing revenues by more than 30%
- Doubling ongoing EPS to $22-$24 per diluted share
- Doubling free cash flow to $1.3-$1.6 billion
MULTIPLE PATHS TO PROFITABLE GROWTH AND MARGIN EXPANSION
Our acquisitions provide us with outstanding opportunities for geographic growth and transformation in Europe and Asia, creating substantial sources of value creation and diversification of our earnings profile. Additionally, we have opportunities for growth as demand in the U.S. continues to recover and we are well positioned to capitalize when growth returns to emerging markets such as Brazil, China and India.
In 2014, we invested more than $700 million in capital expenditures and will continue accelerating our investments in relevant technologies and products that benefit our consumers. We are also driving revenue growth in areas that expand and extend beyond our core appliance business, and by leveraging our core infrastructure we will continue to grow in these higher margin categories.
We also have a significant opportunity to create value with what we believe is the best global cost structure in the industry. We will continue to drive ongoing cost productivity programs, leverage a right-sized fixed cost structure with volume growth, and reduce complexity through high volume global platforms. As a result of these opportunities, we are expecting revenue growth and margin expansion in every region.
Strategic Architecture
These multiple opportunities for growth support our vision to be the best branded consumer products company in every home around the world. We leverage four strategic planks as we strive to create demand and earn trust with our consumers every day. The first two planks focus on “what” we do to fulfill that mission. First, we have to bring great product leadership to the market every day, driving innovation in ways that matter to consumers. That’s our economic engine. Second, we have to continue to invest in our great brands that help us to create demand as each brand connects with our consumers in a unique way tailored toward their preferences.
In addition to understanding “what” we do, we must also focus on “how” we fulfill our mission. The third and fourth planks address just that. We drive operating excellence in every part of our business — from design and manufacturing to selling, shipping and servicing — as we implement the best practices from around the world to ensure we are getting better each and every day. And last, but probably most important, is people excellence. We invest in our people just as we invest in our products and have created a great global employee team. Operating with our core values under these four strategic planks is what differentiates Whirlpool Corporation as the best branded consumer products company.
2015 OUTLOOK
The global environment in which we operate continues to be volatile with emerging market challenges in China and Brazil, volatile demand in Russia and Eastern Europe, currency devaluation in key markets and changing raw materials costs. However, the key to our success in this type of environment is a proactive management approach to delivering on our commitments while managing this volatility.
This approach includes a continual emphasis on cost productivity, restructuring programs that lower fixed costs, new product introductions that drive improved price-mix and, as appropriate, cost-based price increases to offset inflationary headwinds. By focusing on what we can control and meeting the challenges we face, Whirlpool can continue to thrive in these environments.
This year, we are focused on successfully integrating our businesses in Europe and Asia and fully leveraging our new, expanded global platform to create shareholder value. With continued investments in our brands and a very strong lineup of innovative products, both in our core appliances and in our adjacent businesses, we are well-positioned to capitalize on improving demand trends. And we continue to drive benefits through ongoing cost productivity programs.
We are on track for another record year of business operating performance, we’re continuing to build a great global platform for future growth, and we’ll continue to balance funding for all aspects of our business to ensure the best long-term value creation for our shareholders.
Jeff M. Fettig
Chairman of the Board and Chief Executive Officer