No way, 2023 will be another difficult year for Whirlpool. In the first quarter the group communicated a sales drop by 5,5% to $4,65 billion. Excluding the currency factor, the decrease is 3,7%, compared to the quarter of 2022. A result which - is the official comment of the Corporation - is higher than the 4,5 billion estimated by analysts. The decline was influenced by the weakness of global demand which brought down volumes.
Il EBIT margin by 10,0% versus 16,3% in the same period of the previous year, was influenced by the unfavorable price mix and only partially offset by the addition of the good results of InSinkErator, a recent acquisition of Whirlpool.
“In the first quarter, we delivered significant sequential margin expansion, notably,” comments the CEO and President Marc Bitzer – in North America. These results demonstrate the progress made on operational priorities and demonstrate that the group is on track for a better 2023”. The data of quarterly, released on Monday evening by the multinational, were judged beyond expectations on Wall Street where the title recorded a rise of 2,57% to 140,72 dollars in the after hours.
Whirlpool Q1 2023: results better than expected but forecasts are not rosy
However, the forecasts are not rosy for the second quarter which is expected to be more negative than the first just closed and with an – official – forecast for the second part of the year in flat calm. The Real Estate Market North American is stationary, indeed on the decline, the interest rates on mortgage loans are on the rise, theinflation however lurking and a logistics always in trouble. All this makes American families very cautious with regard to the purchase of durable and semi-durable goods.
And just as the first alarms about the Group's decline in sales and prospects were arriving last week, the newspapers reported that the most dynamic sector is that of armaments with a pressing search for manpower -difficult to find-due to the constant increases in purchases from part of the privates and for the war in Ukraine.
Returning to the Whirlpool data, some improvement occurred on the costs of raw materials with a slowdown in the increases in steel prices with a slight but temporary decrease. This panorama of stagnation of the North American appliance market which - it should be noted - represents more than 40 percent of Whirlpool's sales, is also stopping the sales of all the players in the sector. Electrolux just recently communicated that the sale of the large Memphis plant, which is part of the restructuring program of the US branch of the Swedish multinational with about 4 thousand layoffs and substantial reductions in the American production platform, cannot find a buyer. Indeed, the first one that had presented itself quickly withdrew, in the face of the prospects of stalling the market.
Whirlpool Q1 2023: sales by geographical area
Analyzing the sales results by geographical areas of Whirlpool in a nutshell, it is the first time that all these regions have recorded declines in sales and EBIT. Even in Asia, former pillar of growth, the drop exceeds 2023 per cent for the comparison between the two quarters (2022 on 10). L'Europe it is the most negative market with a -18 percent which is influenced by a collapse of Eastern European countries (due to the war in Ukraine and the sale of the Russian branch) estimated by unofficial sources at around 25-30 percent, while the drop in purchases in Western Europe would be around 10-15 per cent but with a positive trend for the high end segments, such as the builtin which now represents 40 per cent of the market. In North America Whirlpool records a slight decline of 1,6 percent (with negative forecasts), while theLatin America achieved the most balanced result, with -0.4 percent thanks also to the strong recovery of sales in Mexico.
Whirlpool: forecasts for 2023 and Emea sale
What does Whirlpool reserve or forecast for 2023, following the ongoing reset of the cost structure? An advantage ranging from 800 to 900 million dollars. While the transaction in place of 75 percent of the EMEA branch to Turkey's Arçelik and due to close by 2023, would lead to the new European company, combined sales of more than €6 billion ($6,5 billion), generating synergies of more than €200 million. It is interesting to know a part of the agreement between the American multinational and the Turkish company which would make a further contribution.
Separately, the parties have indeed agreed to sign a share purchase and sale agreement for Whirlpool to divest its Middle East and North Africa (MENA) part of the EMEA region to Ardutch BV, for a cash amount of EUR 20 million, under a separate transaction. The transaction, when completed, would result in Ardutch acquiring full ownership of two additional Whirlpool subsidiaries located in the United Arab Emirates and Morocco. So far the trend and possible evolutions of the new European company 25% owned by Whirlpool and 75% owned by the Turkish multinational.
However, the future match will be played out on factors that are very different from those which up until now have concerned the traditional parameters of prices, discounts, promotions and, lastly, shareholder remuneration. For example, the American market is renewing itself with a progressive and unstoppable trend demand for eco-friendly products to which American industry is unable to respond due to considerable delays in "green" investments. And the last Salone Internazionale del Mobile in Milan highlighted that orders from world buyers have brutally excluded companies, products and services with a high environmental impact, with a generalized request for certifications. Now you understand why the Arcelik group has invested, like few others, for over ten years huge capitals in a world-record ecological conversion, obtaining prizes and recognitions in many countries. And it has strongly planned, as Firstonline has learned, for some years now, to build a manufacturing base in Europe through acquisitions. As exactly happened. Reading the long report of Whirlpool's first quarter 2023 financial statements, on the other hand, there is no trace of what will be the decisive market trend and global investment.
