Appliance maker Whirlpool sees profitability as material costs ease

Bloomberg

Whirlpool Corp. said it expects easing raw material costs to provide relief to profitability in 2023, even as economic activity loses steam. The shares rose in late trading.
The company expects inflation for inputs such as steel and resins to moderate, which, combined with a cost-cutting initiative, should lower expenses by $800 million to $900 million, Whirlpool said in a statement. The maker of KitchenAid refrigerators sees improved operating margins this year after taking a hit in 2022, and its forecast for free cash flow surpassed estimates.
Whirlpool started cutting expenses in 2022, including a 4% workforce reduction, as it opted to not replace workers who left the company. It’s also renegotiating pricey logistics agreements entered into earlier in the pandemic when ocean freight and other transportation was difficult to come by, among other changes.
Whirlpool sees 2023 revenue at $19.4 billion, a decline of 2% from the previous year, but still above analysts’ average estimate of $19.1 billion.
Demand is softening as a soaring cost of living and a cloudy economic outlook make would-be customers cautious. New US home starts, a key driver of appliance demand, declined last year for the first time since 2009, while sales of existing houses fell in December to the slowest pace in over a decade.
“Many consumers don’t want to leave the home where they’ve got that 3% or less mortgage right now, but it does offer an opportunity to do some remodeling,” Chief Financial Officer Jim Peters said in an interview.adding that replacement demand drives about half of Whirlpool’s business.
Whirlpool had partially released quarterly results and annual guidance on Jan. 17 when it announced a new ownership structure for its European major domestic appliance line.