Whirlpool Enters Contribution Agreement On European MDA Business; 2022 Ongoing EBIT To Decline 43%

Whirlpool Corp. (WHR) announced the completion of the strategic review of its EMEA business. The company will contribute its European major domestic appliance business, and Arcelik will contribute its major domestic appliance, consumer electronics, air conditioning, and small domestic appliance businesses into a newly formed entity of which Whirlpool will own 25% and Arcelik 75%. The new entity is expected to have combined sales of over 6 billion euros. The combined businesses are anticipated to generate cost synergies of over 200 million euros. Post closing, Whirlpool expects full-year cash provided by operations and free cash flow to increase by approximately $100 and $250 million, respectively. Separately, Whirlpool agreed in principle to the sale of Whirlpool's Middle East and Africa business to Arcelik.

In connection with the deal, Whirlpool Corp. recorded a non-cash loss on disposal of approximately $1.5 billion in the fourth-quarter of 2022. The transaction is expected to negatively impact full-year 2022 earnings per share by approximately $26.00 to $28.00 on a GAAP basis with no expected material impact on an ongoing basis.

Whirlpool also stated that, during the fourth-quarter, its North America region experienced a significant one-off supply chain disruption primarily involving one critical supplier which has since been resolved. This disruption negatively impacted the company's sales, production volumes, and EBIT margins in the fourth-quarter of 2022. Looking forward to 2023, the company expects supply constraints to significantly improve during the first quarter, as they have already begun to ease.

Whirlpool announced estimated preliminary 2022 ongoing earnings per share of approximately $19.25, down 28% from prior year. Ongoing EBIT is projected to be approximately $1.335 billion, a decline of 43%. GAAP loss per share is projected to be approximately $27.50. Net sales are estimated to be approximately $19.70 billion, down 10% from last year.

Whirlpool expects 2023 operational performance to be similar to 2022.

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