Whirlpool Review: decrease in net debt and growth in margins

        <img class="aligncenter" src="wp-content/uploads/2021/08/obzor-whirlpool-snizhenie-chistogo-dolga-i-rost-marzhinalnosti-ad44ee9.png" alt="Обзор Whirlpool: снижение чистого долга и рост маржинальности" />

Whirlpool (NYSE: WHR) — один из ведущих мировых производителей бытовой техники, selling under his own brand Whirlpool, Maytag, KitchenAid, Brastemp, Consul и Indesit. Whirlpool was founded in 1911 as a small company in Benton Harbor., Michigan.

About company

At the end of the year, in the structure of revenue, product lines occupied as many:

  • cooling - 31%;
  • wash - 29%;
  • food preparation - 24%.

Largest regions of revenue: North America - 58% and Europe, Middle East and Africa - 22%.

Revenue structure, million dollars

Revenue Percentage of total
Washing 5675 29,17%
Cooling 6058 31,14%
Food preparation 4782 24,58%
Dishwashing 1605 8,25%
Spare parts and warranties 913 4,69%
Other 423 2,17%
Total 19 456 100,00%

Revenue

Washing
5675

Cooling
6058

Food preparation
4782

Dishwashing
1605

Spare parts and warranties
913

Other
423

Total
19 456

Percentage of total

Washing
29,17%

Cooling
31,14%

Food preparation
24,58%

Dishwashing
8,25%

Spare parts and warranties
4,69%

Other
2,17%

Revenue by region, million dollars

Revenue Percentage of total
North America 11 210 58%
Latin America 2592 13%
Europe, Middle East and Africa 4389 22%
Asia 1265 7%
Total 20 718 100%

Revenue

North America
11 210

Latin America
2592

Europe, Middle East and Africa
4389

Asia
1265

Total
20 718

Percentage of total

North America
58%

Latin America
13%

Europe, Middle East and Africa
22%

Asia
7%

Financial indicators

11 Whirlpool releases full year 2020 financials on Feb..

Consolidated net sales in 2020 decreased by 4,7% - up to 19.45 billion dollars. The fall is due to the high base effect: the company sold Embraco in 2019, which was partially offset by the favorable impact of product prices in 2020.

Operating profit increased by 3,2% - up to 1.6 billion dollars, margin increased by 0,7 percentage point by reducing the cost of goods sold, general and administrative expenses and sales expenses.

Whirlpool posted net income of $ 1.1 billion, or 17,07 $ per share. Free cash flow increased by 36,6% due to the growth of profit from operating activities. The company expects, that in 2021 will receive an earnings per share of 17.8-18.8 $.

  FedEx: The company's revenue increased by thirty percent in the fourth quarter

Financial performance of the company by year, million dollars

Revenue Operating profit Operating margin Net profit free cash flow
2016 20 718 1368 6,6% 888 0,630
2017 21 253 1136 5,3% 350 0,707
2018 21 037 279 1,3% −183 0,853
2019 20 419 1571 7,6% 1184 0,912
2020 19 456 1623 8,3% 1081 1,246

Revenue

2016
20 718

2017
21 253

2018
21 037

2019
20 419

2020
19 456

Operating profit

2016
1368

2017
1136

2018
279

2019
1571

2020
1623

Operating margin

2016
6,6%

2017
5,3%

2018
1,3%

2019
7,6%

2020
8,3%

Net profit

2016
888

2017
350

2018
−183

2019
1184

2020
1081

free cash flow

2016
0,630

2017
0,707

2018
0,853

2019
0,912

2020
1,246

Balance sheet and leverage

Assets grew by 8,3% compared to the previous year due to the growth in the volume of money and cash equivalents. Capital increased by 18,9% due to the growth of retained earnings.

Total debt increased by 7% — up to 5.3 billion — due to the growth of long-term debt.

In February, Whirlpool completed a €500 million bond offering at 0,5% maturing in 2028. In May, the company issued $500 million worth of bonds at 4,6% maturing in 2050.

Most of the payments on the company's debt obligations are for the period after 2025. Most debt repayments are denominated in US dollars at rates ranging from 0,63 to 4,6%. Net debt decreased by 19,59% — up to $2.4 billion — due to the growth in the volume of cash and cash equivalents.

Balance sheet and leverage, billion dollars

Assets Capital Total debt net debt
2016 19,153 4,773 4,470 3,385
2017 20,038 4,198 5,218 4,022
2018 18,347 2,291 6,027 4,529
2019 18,881 3,195 4,993 3,041
2020 20,436 3,799 5,369 2,445

Assets

2016
19,153

2017
20,038

2018
18,347

2019
18,881

2020
20,436

Capital

2016
4,773

2017
4,198

2018
2,291

2019
3,195

2020
3,799

Total debt

2016
4,470

2017
5,218

2018
6,027

2019
4,993

2020
5,369

net debt

2016
3,385

2017
4,022

2018
4,529

2019
3,041

2020
2,445

Market

The global home appliance market has long been established, and the key players on it have not changed for a long time. Major players: Whirlpool, Samsung Electronics, Bosch, Haier Smart Home.

In 2020, COVID-19 disrupted the global appliance and electronics supply chain. China is one of the largest consumers and producers of products, as well as an exporter of raw materials for the production of finished products. The stoppage of production in China forced companies in the US and Europe to suspend the production of finished products, and this has led to a widening gap between supply and demand.

  Finnish Corporation Nokia has presented its quarterly report for January-March 2021 G.

Technological advances like the Internet of Things have led to the development of smart home appliances. The need for comfort and consumption drives the purchase of new, smarter versions of household appliances.. Experts expect, that the smart home appliance market will grow by $31.66 billion in 2020-2024 at a CAGR of over 16%.

Generally, according to forecasts, home appliances market to grow by $21.76 billion in 2020-2024, while the average annual growth rate will be almost 1% during the forecast period. The fastest growing market will be the Asia-Pacific region. You can expect, that Whirlpool's revenue won't change much in the long run.

Competitors

Whirlpool Leads in ROE. The company's revenue growth rate is negative, like most competitors, - it proves, that the home appliance market is almost stagnant, and high growth of key indicators of the company can not be expected.

Revenue in billion dollars, growth rate and ROE

Growth rate ROE Revenue 2016 Revenue 2020
Whirlpool −1,26 30,91 20,72 19,45
Samsung Electronics 3,25 9,99 201,8 236,81
Bosch −0,92 5,05 101,76 97,16
Haier Smart Home 11,26 15,02 138,2 235,64
Electrolux −0,85 19,33 121,09 116,03

Growth rate

Whirlpool
−1,26

Samsung Electronics
3,25

Bosch
−0,92

Haier Smart Home
11,26

Electrolux
−0,85

ROE

Whirlpool
30,91

Samsung Electronics
9,99

Bosch
5,05

Haier Smart Home
15,02

Electrolux
19,33

Revenue 2016

Whirlpool
20,72

Samsung Electronics
201,8

Bosch
101,76

Haier Smart Home
138,2

Electrolux
121,09

Revenue 2020

Whirlpool
19,45

Samsung Electronics
236,81

Bosch
97,16

Haier Smart Home
235,64

Electrolux
116,03

Dividends and buyback program

Whirlpool's dividend yield for 2020 was 2,6%, and the total profitability — 4,01%.

The company has been actively buying back its shares in recent years.: Whirpool bought back $121 million in shares in 2020, at the same time, dividend payments amounted to 311 million. This year, the company announced a new $2 billion share repurchase program.. This is in addition to the unused portion of the previous $531 million share buyback program as of December 2020.. This is quite a significant amount.: she is 17% from the current capitalization of Whirlpool at 13.9 billion.

Average total return on Whirlpool shares over the past 5 years was 8,49% with an average annual growth rate of dividends 6,63%.

Company dividends

Dividend per share Payout ratio Dividend yield Buyback Yield Total return
2016 3,90 $ 34% 2,15% 4,06% 6,21%
2017 4,30 $ 92% 2,55% 5,07% 7,62%
2018 4,55 $ 4,26% 18,92% 23,18%
2019 4,75 $ 26% 3,22% 1,46% 4,68%
2020 4,85 $ 28% 2,69% 1,32% 4,01%
  US stock market news - NYSE, NASDAQ on 07.03.2017

Dividend per share

2016
3,90 $

2017
4,30 $

2018
4,55 $

2019
4,75 $

2020
4,85 $

Payout ratio

2016
34%

2017
92%

2018

2019
26%

2020
28%

Dividend yield

2016
2,15%

2017
2,55%

2018
4,26%

2019
3,22%

2020
2,69%

Buyback Yield

2016
4,06%

2017
5,07%

2018
18,92%

2019
1,46%

2020
1,32%

Total return

2016
6,21%

2017
7,62%

2018
23,18%

2019
4,68%

2020
4,01%

Company multipliers

Most of Whirlpool's multiples point to a discount in its share price to its peers..

But, considering the key multiplier P / E and share price dynamics in recent years, the relationship until 2021 can be noted. Now the blur between the indicators has increased - this may indicate the activity of speculative participants.

They reacted violently to the company's positive news: double-digit revenue growth based on results 1 quarter of 2021 and an approved share buyback program.

This limits growth potential, based on multiplier analysis. Usually, such gaps in indicators close over time - this leads to a decrease in the share price or to a revaluation of the multiplier.

Company multipliers

P / E P / BV P / S EV / EBITDA
Whirlpool 12,72 2,99 0,59 5,95
Samsung Electronics 21,04 2,06 2,32 6,85
Bosch 94,85 4,66 4,71 42,66
Haier Smart Home 18,44 3,20 0,79 12,46
Electrolux 12,49 3,56 0,59 5,65
Mean 31,91 3,29 1,80 14,71
Growth potential 151% 10% 205% 147%

P / E

Whirlpool
12,72

Samsung Electronics
21,04

Bosch
94,85

Haier Smart Home
18,44

Electrolux
12,49

Mean
31,91

Growth potential
151%

P / BV

Whirlpool
2,99

Samsung Electronics
2,06

Bosch
4,66

Haier Smart Home
3,20

Electrolux
3,56

Mean
3,29

Growth potential
10%

P / S

Whirlpool
0,59

Samsung Electronics
2,32

Bosch
4,71

Haier Smart Home
0,79

Electrolux
0,59

Mean
1,80

Growth potential
205%

EV / EBITDA

Whirlpool
5,95

Samsung Electronics
6,85

Bosch
42,66

Haier Smart Home
12,46

Electrolux
5,65

Mean
14,71

Growth potential
147%

What's the bottom line?

Whirlpool was relatively painless 2020 year of the pandemic. The company noted a positive effect, caused by an increase in demand and prices for its products, which can continue. In general, the global home appliances market is a weakly growing market., which does not imply a significant increase in the company's key financial indicators in the future. At the same time, the company's dividend history and massive buyback program make Whirlpool an attractive buy..

They are suitable for value investors, who take a conservative approach. Whirlpool shares look interesting for medium-term investments and dividends, but there is a possibility of price decline.

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