EU CONSUMER CYCLICALS: Whirlpool: 4Q (to Dec) results

(WHR; Baa3 Neg/BBB- Stable/BBB- Neg)

We will circle back after the earnings call (US morning). Guidance for next year is firmer but 4Q performance looks lacklustre vs. Electrolux. We have had serious governance concerns on this co - it operates 3x turns above its stated net 2x target yet all FCF goes to equity holders - it's only real deleveraging of recent has been from asset sales. Little cost to rotate into ELTLX, we maintain caution on WHR (i.e. see room for the below spread move to conitnue).

• 4Q organic sales +1.9%, adj. EBIT margin of 6% (+80bps)
  • NA -1.4% on 6.7% margin, LATAM -4% on 7.6%, Asia +8% on 12.5% margin, other +6% on 12.5% margin
  • NA tends to be 60% of group sales, LATAM 20%. Europe was (largely) divested.
• FCF of $385m largely unch on last year
• Dividends continue at $1.75/qtr ($384/yr)
• BS is carrying g/n debt of $8b/$6.7b
  • $1.8b due this year, all in $s. It did say it would refi a portion of it - divestment of European operations may bias it away from us.

FY25 guidance;

• Sales of $15.8 (+3%yoy)
• adj. EBIT margin of 6.8% (+100bps)
  • includes $200m in structural cost savings
• FCF in $500-600m range
• $500-600m in additional cash to come from reducing stake in Whirlpool India to 20%
• Expects to pay down $700m of debt