Whirlpool Corp.
WHR 0.40%
, whose European operations have been challenged by Russia’s invasion of Ukraine, said Tuesday it is turning over much of its appliance business in the region to a new entity controlled by a Turkish appliance maker.
The new company, which will be majority-owned by Turkey-based
Arcelik AS
ARCLK.E 9.94%
, is expected to have a combined $6.5 billion in sales, Whirlpool said. The Benton Harbor, Mich.-based appliance maker will own 25% of the new entity after the transaction is completed, which the company said is expected to happen by the end of the year.
The deal caused Whirlpool to record a $1.5 billion loss in 2022’s fourth quarter, including a $1.1 billion write-down of the company’s Europe, Middle East and Africa business and $400 million of currency adjustments, the company said. The transaction is expected to hurt 2022 full-year earnings per share by $26 to $28, Whirlpool said.
Whirlpool’s stock closed slightly higher Tuesday, while major U.S. stock indexes generally declined.
Whirlpool executives said in April they were starting a strategic review of the company’s operations in Europe, the Middle East and Africa, which accounted for 23% of the company’s total revenue in 2021. Russia’s invasion of Ukraine hurt demand and drove up costs in the region, the company said.
Whirlpool Chief Financial Officer
Jim Peters
said in an interview that Whirlpool’s European operations enjoyed periodic success, but its acquisition of Italian appliance maker Indesit Co. SpA in 2014 gave the company greater exposure to regions that turned problematic. Those included Russia after the invasion and the United Kingdom, which was hurt by currency devaluation following the Brexit vote in 2016.
“It goes along with our portfolio transformation in that we really want to focus our time and our investments in high-growth, high-margin areas of our business,” Mr. Peters said. “So only having a 25% stake really means we participate in the potential upside here, but then also we don’t have to dedicate a lot of time or resources to it going forward.”
In a separate deal, Arcelik said its Ardutch B.V. subsidiary is acquiring Whirlpool’s Africa and Middle East business for $21.6 million, though Whirlpool said it would continue operating its KitchenAid, Maytag and InSinkErator brands in those markets. Whirlpool in August sold its Russia business, including a plant in Lipetsk and sales operations in Moscow, Kazakhstan and other nearby countries, to Arcelik for up to $260 million of deferred payments.
Whirlpool, like other manufacturers, has more broadly struggled with weakening consumer demand and increasing costs for materials, energy and other expenses. The company cut production by 35% during the third quarter of 2022 to shrink inventories, and said its North American operations dealt with an unspecified supply-chain disruption in the fourth quarter that has now been resolved.
Whirlpool had previously sold its Russia business.
Photo:
Sergei Fadeichev/Zuma Press
In a preview of its 2022 financial results, which are set for release Jan. 30, the company said Tuesday it expects full-year net sales to be down 10% from 2021. Earnings per share were expected to be negative $27.50 on a GAAP basis, but a positive $19.25 excluding the one-time charges. That would represent a 28% decline from 2021’s level.
Mr. Peters said the results were due in large part to the write-downs related to its Europe, Middle East and Africa businesses. He said that the company expects inflation to ease in 2023, and for appliances to remain in demand over the long term.
“We still believe you can create value from (European operations) but it’s going to take a longer period of time,” he said.
Write to John Keilman at john.keilman@wsj.com
Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
Whirlpool Corp.
WHR 0.40%
, whose European operations have been challenged by Russia’s invasion of Ukraine, said Tuesday it is turning over much of its appliance business in the region to a new entity controlled by a Turkish appliance maker.
The new company, which will be majority-owned by Turkey-based
Arcelik AS
ARCLK.E 9.94%
, is expected to have a combined $6.5 billion in sales, Whirlpool said. The Benton Harbor, Mich.-based appliance maker will own 25% of the new entity after the transaction is completed, which the company said is expected to happen by the end of the year.
The deal caused Whirlpool to record a $1.5 billion loss in 2022’s fourth quarter, including a $1.1 billion write-down of the company’s Europe, Middle East and Africa business and $400 million of currency adjustments, the company said. The transaction is expected to hurt 2022 full-year earnings per share by $26 to $28, Whirlpool said.
Whirlpool’s stock closed slightly higher Tuesday, while major U.S. stock indexes generally declined.
Whirlpool executives said in April they were starting a strategic review of the company’s operations in Europe, the Middle East and Africa, which accounted for 23% of the company’s total revenue in 2021. Russia’s invasion of Ukraine hurt demand and drove up costs in the region, the company said.
Whirlpool Chief Financial Officer
Jim Peters
said in an interview that Whirlpool’s European operations enjoyed periodic success, but its acquisition of Italian appliance maker Indesit Co. SpA in 2014 gave the company greater exposure to regions that turned problematic. Those included Russia after the invasion and the United Kingdom, which was hurt by currency devaluation following the Brexit vote in 2016.
“It goes along with our portfolio transformation in that we really want to focus our time and our investments in high-growth, high-margin areas of our business,” Mr. Peters said. “So only having a 25% stake really means we participate in the potential upside here, but then also we don’t have to dedicate a lot of time or resources to it going forward.”
In a separate deal, Arcelik said its Ardutch B.V. subsidiary is acquiring Whirlpool’s Africa and Middle East business for $21.6 million, though Whirlpool said it would continue operating its KitchenAid, Maytag and InSinkErator brands in those markets. Whirlpool in August sold its Russia business, including a plant in Lipetsk and sales operations in Moscow, Kazakhstan and other nearby countries, to Arcelik for up to $260 million of deferred payments.
Whirlpool, like other manufacturers, has more broadly struggled with weakening consumer demand and increasing costs for materials, energy and other expenses. The company cut production by 35% during the third quarter of 2022 to shrink inventories, and said its North American operations dealt with an unspecified supply-chain disruption in the fourth quarter that has now been resolved.
Whirlpool had previously sold its Russia business.
Photo:
Sergei Fadeichev/Zuma Press
In a preview of its 2022 financial results, which are set for release Jan. 30, the company said Tuesday it expects full-year net sales to be down 10% from 2021. Earnings per share were expected to be negative $27.50 on a GAAP basis, but a positive $19.25 excluding the one-time charges. That would represent a 28% decline from 2021’s level.
Mr. Peters said the results were due in large part to the write-downs related to its Europe, Middle East and Africa businesses. He said that the company expects inflation to ease in 2023, and for appliances to remain in demand over the long term.
“We still believe you can create value from (European operations) but it’s going to take a longer period of time,” he said.
Write to John Keilman at john.keilman@wsj.com
Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8