Whirlpool's Strategic Moves for Margin Expansion Amidst Economic Challenges

Cost-cutting and Operational Efficiencies

Whirlpool is focusing on manufacturing supply chain efficiencies, automation, and optimizing input costs to pre-COVID levels. The company aims for $300-$400 million in cost savings for 2024, driven by organizational simplification and fixed cost reductions. These measures are expected to enhance EBIT margins by over 100 basis points each quarter in the latter half of 2024.

"We are confident there are additional cost takeout opportunities ahead, as we shared at our investor day, such as manufacturing supply chain efficiencies including automation across our business, and continuing to optimize our input costs back to pre-COVID levels. For full year guidance, we are reiterating flat net sales of $16.9 billion driven by new product launches, strong replacement demand, previously announced MDA North America pricing actions, and continued strength in our international businesses." --- (WHR, earning call, 2024/Q2)

"Our free cash flow delivery enables us to continue to return cash to shareholders with our capital allocation priorities unchanged. Finally, continuing our nearly 70-year history of steady or increasing dividends, we paid $1.75 per share in the second quarter and expect to return $400 million to shareholders in the form of dividends this year. Turning to Slide 7, I will review second quarter ongoing EBIT margin drivers." --- (WHR, earning call, 2024/Q2)

"Overall, the segment delivered a 6.3% EBIT margin for the quarter. We expect that our pricing and cost takeout actions will continue to drive greater than 100 basis points of sequential margin expansion each quarter in the second half of 2024, and expect a Q4 EBIT margin of approximately 9%.Turning to Slide 9, I will provide an update on our pricing actions and cost actions, which remain on track.As you may recall, last quarter we discussed the promotional investments in the U.S. that were not achieving the expected incremental volume lift." --- (WHR, earning call, 2024/Q2)

"As previously noted, with sticky inflation impacting supply chain costs, we experienced a slower start to our incremental cost actions, leading us to trend towards the lower end of a $300 million to $400 million range for cost takeout at this time." --- (WHR, earning call, 2024/Q1)

"We took out $500 million of fixed costs since 2019, and with the organizational simplification delivering $100 million in cost savings alone in 2024, we are on track to achieve $300 million to $400 million of cost savings for the year." --- (WHR, earning call, 2024/Q2)

Pricing Strategies and Adjustments

Whirlpool's pricing strategies involve adjusting promotional prices to efficiently increase net prices, reflecting consumer value perception. The company notes minimal consumer sensitivity to price changes due to the infrequent nature of appliance purchases, supporting their margin expansion efforts. These adjustments are part of a broader strategy to manage costs and improve margins in North America.

"It's just pure math of -- the economics just don't work. So, there's two components on why we're doing the promotion price program adjustments." --- (WHR, earning call, 2024/Q1)

"By adjusting our promotional programming prices, we are able to quickly and efficiently increase net prices with relatively little lead time." --- (WHR, earning call, 2024/Q1)

"As it relates to promotion price increase, again, let's first of all keep in mind, historically, consumer elasticity to broader category pricing is very little, i.e., given that it's an infrequent purchase, consumers -- there's no hypersensitivity on consumer side towards category pricing." --- (WHR, earning call, 2024/Q1)

"The margin turnaround in North America, which we’re doing the right things on pricing, we’re doing the right things on cost, and yes, at one point we need to also have some support from the housing market, and that will be a key element in how we bridge." --- (WHR, earning call, 2024/Q2)

"So, we do believe our promotional pricing and the revised promotional pricing fully reflects the value which the consumer gets for it and the consumer is willing to pay for it." --- (WHR, earning call, 2024/Q1)

Product Innovation and Premium Offerings

Whirlpool is leveraging product innovation and premium offerings to drive value, launching new high-growth potential products like KitchenAid espresso machines. Despite economic challenges, the company focuses on purposeful innovation across its iconic brand portfolio to meet evolving consumer needs and maintain competitive margins.

"The company will be well-positioned to deliver value to consumers through attractive brands, sustainable manufacturing, product innovation and consumer services." --- (WHR, press release, 2024/04/02)

"Earlier this month, we launched and floored our new semi and fully automatic KitchenAid espresso machines at premium retailers, providing a product lineup offering in one of the categories with the highest growth potential based on current market trends." --- (WHR, earning call, 2024/Q1)

"In a down discretionary environment, you are impacted at the super premium and premium level significantly more and you do see more business in the value, so you’ve got a shift to a lower margin in terms of your brand portfolio. Also, as you look at your product portfolio, I talked about the type of products that you see a consumer replacing relatively quickly, we’ve always talked about within our portfolio, refrigeration is the lowest in terms of margin, very competitive space through laundry, and then to more your cooking and dish." --- (WHR, earning call, 2024/Q2)

"In an increasingly digital world, the company is driving purposeful innovation to meet the evolving needs of consumers through its iconic brand portfolio, including Whirlpool, KitchenAid, Maytag, Consul, Brastemp, Amana, JennAir and InSinkErator." --- (WHR, press release, 2024/04/02)

"In an increasingly digital world, the company is driving purposeful innovation to meet the evolving needs of consumers through its iconic brand portfolio, including Whirlpool, KitchenAid, Maytag, Consul, Brastemp, Amana, Bauknecht, JennAir, Indesit and InSinkErator." --- (WHR, press release, 2024/05/13)

Supply Chain Optimization

Whirlpool's supply chain optimization initiatives have already resulted in $150 million in cost savings in the first half of 2024, with further savings expected from manufacturing and supply chain improvements in the second half. These efforts focus on creating a more intelligent, flexible, and automated supply chain.

"Despite the macro environment, we delivered approximately $150 million of cost takeout globally in the first half of 2024, and we expect our manufacturing and supply chain initiatives to deliver the majority of the cost takeout in the second half. Turning to Slide 10, I’ll review the results of our MDA Latin America business." --- (WHR, earning call, 2024/Q2)

"And they're building and improving the operating system that enables us to create a more intelligent, flexible, and automated supply chain." --- (WMT, earning call, 2025/Q1)

"Yes. Well, so with supply chain automation, there are many aspects to that." --- (WMT, conference, 2024/06/25)

Digital Transformation Initiatives

Whirlpool's digital transformation initiatives are aimed at maximizing value through portfolio transformation, driving operational efficiencies, and creating investment flexibility for innovation in core growth areas such as hybrid cloud, AI, and automation.

"This marks a significant step in Whirlpool Corporation's portfolio transformation and is expected to provide considerable opportunities to maximize value." --- (WHR, press release, 2024/04/02)

"are driving the operational efficiencies of productivity so we could create the investment flexibility in driving innovation in core areas of growth that we still see very strong, hybrid cloud, Gen AI, digital transformation, automation, application modernization and that's where our focus area is." --- (IBM, conference, 2024/05/20)

"So how do organizations take all of that investment that they made in their digitization, in the new kind of digital foundation, their IT investments, how did they then make sure that they right size those." --- (MSFT, conference, 2024/05/21)

Sustainability and Environmental Initiatives

Whirlpool's sustainability initiatives include the Feel Good Fridge program, which has donated over 900 refurbished refrigerators and delivered 250,000 pounds of food, and their collaboration with The Washing Machine Project to collectively impact more lives. Additionally, Whirlpool is addressing climate change and regulatory challenges to enhance their environmental efforts.

""We launched Feel Good Fridge to fight food insecurity in a sustainable way, and collaborating with HelloFresh and TQL allows us to expand our impact in the communities that need it most." In the three years since its launch, the Feel Good Fridge program has donated more than 900 refurbished refrigerators, keeping them out of landfills; delivered more than 250,000 pounds of food, helping avoid waste; and reached more than 25,000 families." --- (WHR, press release, 2024/05/28)

""We greatly admire the mission and work of The Washing Machine Project and see an opportunity to help impact more lives collectively than either of us could individually," said Pam Klyn, Whirlpool Corporation executive vice president, corporate relations and sustainability." --- (WHR, press release, 2024/04/15)

"risk; (22) health care cost trends, regulatory changes and variations between results and estimates that could increase future funding obligations for pension and postretirement benefit plans; (23) litigation, tax, and legal compliance risk and costs; (24) the effects and costs of governmental investigations or related actions by third parties; (25) changes in the legal and regulatory environment including environmental, health and safety regulations, data privacy, and taxes and tariffs; (26) Whirlpool's ability to respond to the impact of climate change and climate change regulation; and (27) the uncertain global economy and changes in economic conditions." --- (WHR, press release, 2024/04/24)