Stock traders reacted negatively to Whirlpool Corporation’s most recent earnings report. The stock slid by more than four percent in pre-market trading Tuesday and by more than six percent throughout the trading day. Traders were said to be largely reacting to guidance for 2024 revenues not meeting investor expectations.
The Benton Harbor-based appliance manufacturer reported fourth-quarter net sales growth of approximately three percent with one point of North America share gains year-over-year. Earnings per share for the fourth-quarter were $3.85, beating market expectations. Revenues for the quarter were reported at $5.09 billion. The company reported generating $2.88 billion in North America net sales, up 1.3 percent year-over-year.
For 2024, the company is projecting net sales of $16.9 billion dollars – essentially the same as 2023 when its transaction to sell off its European operations is excluded.
During a call with investors, CEO Marc Bitzer specifically highlighted the challenges and opportunities in North America during the fourth quarter of 2023. He said investments in marketing and promotions returned near to pre-COVID levels, but looking back, discretionary demand was softer than expected.
“The ROI didn’t work out as expected. It’s just because the discretionary demand and the pool of discretionary in the market was limited and the whole equation got unbalanced and that led to margin erosion in Q4.”
Looking to 2024, Bitzer said the focus is on margin expansion and the company will achieve that through heavy investments in the brands and new products. Bitzer also said the company will continue cost takeout actions.
“In 2023, we delivered over a point of North America share gains and approximately $800 million of cost takeout as expected. Looking forward to 2024 we expect to further reset our cost structure with an additional $300 – $400 million of cost takeout, while our portfolio transformation will unlock margin lift with the close of the Europe transaction, expected in April 2024.”
Bitzer said the company will continue to simplify its operations in 2024, taking advantage of a smaller, less complex footprint following the conclusion of its Europe transaction.
“We will continue (investing) in marketing and technology and products. That’s ultimately the lifeblood of our company and creates future growth.”
Overall, Bitzer appeared confident in stronger results moving forward.
“We remain bullish on the mid- and long-term housing cycle. The market has been undersupplied for over a decade by three to four million units. The long overdue rebalancing of demand and supply will occur at one point, but not in the very short term. While we already see a gradual and steady recovery of new home orders and starts, We all know that these trends typically need six to nine months to turn into appliance sales.”
In late February, Whirlpool Corporation will hold an investor day at the New York Stock Exchange. It’s the first time since 2019 that the company has returned to that event.
