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Whirlpool Leaders Predict Smoother Financial Waters Ahead After Bumpy 4th Quarter

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Marc Bitzer says he’s “optimistic” about the second half of 2023 and “bullish” about the ‘demand cycle’ that will drive Whirlpool’s appliance business in 2024.  The Whirlpool Chairman and Chief Executive Officer met with Wall Street writers today for his quarterly Conference Call, reviewing 4th Quarter and Annual 2022 operating results.

Putting it another way, Bitzer said “Economic headwinds of 2022 will turn to tailwinds late in the 2nd quarter or early 3rd Quarter of 2023.”   He predicted almost two thirds of Whirlpool’s 2023 profits will be earned in the second half of the year as consumer demand heats up, especially in the appliance replacement and home remodeling segments of the market.  He acknowledged that appliance sales for new home construction will continue to be a challenge, driven by currently high mortgage interest rates.

To investors, Bitzer and Whirlpool Chief Financial Officer Jim Peters projected 2023 as a year of relative stability, thanks to their commitment to hold the line on costs, while looking ahead to a brighter 2024 as the demand cycle improves and recessionary pressures, hopefully, decrease.  Peters expects Whirlpool’s ‘free cash flow’ to total at least $ 800 million dollars in 2023 and Bitzer added that he could see that number increasing by $ 300 million or more in 2024.

While Peters acknowledged that Whirlpool sales will be down a percent or two in 2023, based on weak demand, Bitzer was very optimistic about the naturally cyclical consumer demand curve bolstering the company’s prospects for 2024.  He said a normal, predictable ‘replacement cycle’ for home appliances should be kicking in as 2023 progresses and be in full swing next year.  Bitzer based that on a normal ten year replacement cycle that he said coincides with strong US appliance sales back in the 2012-2014 period.

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Bitzer also suggested that currently high mortgage rates on new homes will help drive the kitchen remodeling market over the short term, impacting positively on sales in the second half of 2023 and into 2024.  He pointed out that will be an opportunity for growth in Whirlpool’s newly acquired ‘InSinkerator’ division, which dominates the high-end home disposal market, concentrated in kitchen upgrades.

Bitzer predicted InSinkerator will eventually add $100 million dollars to Whirlpool’s free cash flow.  He said the brand matches up perfectly with the highly successful KitchenAid brand of high-end small appliances and he expects to see synergy between those brands going forward.

Looking back over 2022, Bitzer and Peters took some credit for moving swiftly to control costs in a recessionary situation exacerbated by supply chain issues with a key supplier.  They both said the supply chain issue has been solved as of this month, however it contributed to weak 4th quarter sales for Whirlpool products that affected performance for the full year.  Bitzer said Whirlpool’s work force is down about four percent from a year ago, contributing to continuing cost savings.

Bitzer offered no comments on the sudden departure, announced Monday, of Whirlpool President and Chief Operating Officer Joseph Liotine.  None of the Wall Street analysts raised the issue during a Question & Answer session after the company’s Conference Call presentation.  Liotine is said to have exited his position immediately this week, serving in a ‘consulting role’ until March 31.  Bitzer assumed direct responsibility for all global operations with the departure of his ‘Number Two’ ranking executive.