Leadership Conf Nov 26 2014 - Final

8/12/2019 Leadership Conf Nov 26 2014 - Final

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WHIRLPOOL CORPORATION CONFIDENTIAL

EMEA LEADERSHIP TELECONFERENCENOVEMBER 26, 2013

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AGENDA

Welcome Esther Berrozpe

Full Year Outlook 2013 Sidnei Sanches

Profit Plan 2014 Esther Berrozpe

Sidnei Sanches

ELA: Built-in Marco Balliano

Q&A All

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Key Financial Performance

QUARTER 4 EOP OUTLOOK

Q4 Nov Fcst vs Q4 Sept Fcst Q4 Nov Fcst vs Q3 Actual

USD

1 10.8 (9.2) (6.7) 4.9 9.2 0.4 10

Q3 (Actual) Volume PMR P4G Rev Gen SDA CS Q4 (Nov Fcst)

0.1% 1.2%

Warranty: (0.9)m$

Pension: (1.2)m$

Infra : (1.9)m$

Seasonality: (2.5)m$

Engineering: 0.5m$

O&T: 0.3m$

MDA (33)kUUSD

15 (1.8) (3.9) (2.7) 2.0 0.4 0.7 10

Q4 (Sep Fcst) Volume PMR P4G Rev Gen SDA CS Q4 (Nov Fcst)

1.8% 1.2%

Material: (4.0)m$

O&T/OCOS: 1.3m$

F(x)

Q4 Q4 Q3 Q4

Nov Fcst Sep Fcst Actual LY vs. Sep Fcst vs. Q3 ACT vs. Q4 LY

Units 3,313 3,360 3,058 3,214 (47) 255 99

Net Sales 824 875 780 794 (51) 43 30asv 248.6 260.5 255.2 247.1 (11.8) (6.6) 1.5

11.8% 11.9% 10.8% 12.1% (0.1) pts 1.0pts (0.3) pts

(10.4)% (10.1)% (10.6)% (11.1)% (0.3) pts 0.2pts 0.7pts

EOP Reported 10 15 1 8 (5) 9 2

1.3% 1.8% 0.1% 1.0% (0.5) pts 1.1pts 0.3pts

F(x) 1.33 1.33 1.33 1.30

Q4

SG&A %

% of Sales

US$ Million

Gross Margin %


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FULL YEAR EOP OUTLOOK

4

Q1 Q2 Q3 Q4 FY FY FY FY

ACTUAL ACTUAL ACTUAL OUTLOOK OUTLOOK SEP FCST MAY FCST LYEAR

Units 2,566 2,918 3,060 3,313 11,858 12,000 12,087 11,546

Net Sales 668 732 778 824 3,001 3,085 3,115 2,874

11.4% 11.3% 10.8% 11.8% 11.3% 11.4% 12.3% 9.9%

(12.5)% (12.0)% (10.6)% (10.4)% (11.3)% (11.2)% (10.9)% (11.5)%

EOP Reported (8) (6) 1 10 (4) 1 40 (52)

(1.2)% (0.9)% 0.1% 1.2% (0.1)% 0.0% 1.3% (1.8)%

F(x) 1.32 1.31 1.33 1.33 1.32 1.33 1.31 1.29

Gross Margin %

SG&A %

% of Sales

US$ Million


5/32WHIRLPOOL CORPORATION CONFIDENTIAL

EXECUTIVE SUMMARY

Macro-economic environment unchanged, still uncertain and volatile

Industry demand expected to be flat overall; continuous decline in West Europe andgrowth in East and MEA region

Step improvement in EMEA EOP driven primarily by MDA business

PMR and selective volume growth in key markets/categories

Restructuring plans(footprint and infrastructure)

P4G execution

Cash generation driven by earnings and working capital improvement

TURN AROUND OF OUR MDA BUSINESS AND

ENHANCE GROWTH AND PROFITABILITY OF SDA AND CUSTOMER SERVICE

EMEA PROFIT PLAN 2014

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KEY ASSUMPTIONS


2013

Outlook

2014

PPVariance

HighLeve

ls

Indicators

Industry Growth % (0.8)% 0.0%

Market Share (%) 8.3% 8.6% 0.3 ptsVolume MDA (M units) 11.0 11.8 7.0%

Volume SDA (M units) 0.7 1.0 33.6%

Production (M units) 8.6 8.9 3.5%

Revenues (Bi$) 3.0 3.3 10.0%

KeyEOP

Drivers

PMR (% of Net Sales) (1.7)% 1.5%

P4G Net (M$) 26 29Restructuring (M$) 23 33

Rev Gen (% of Net Sales) 1.4% 2.0% (0.6) pts

US$ Fx (avg) 1.32 1.33

EOP.FCF.

&WorkingCa

pital EOP EMEA (4) 125 129

(% of Net Sales) (0.1)% 3.8% 3.9 pts

FCF 65 110 45(% of Net Sales) 2.2% 3.3% 1.1 pts

Working Capital Year end 8.7% 6.3% 2.4 pts

Year avg. 16.0% 14.0% 2.0 pts

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EMEAFULL YEAR P&L

FY FY FY PP'14 vs OL13 OL13 vs 2012

Mln US$ PP 2014 OL 2013 2012 B / (W) B / (W)

Units 12,881 11,858 11,546 1,023 312Net Sales 3,310 3,001 2,874 309 127

ASV 257.0 253.1 248.9 3.9 4.2

Cost of Sales 2,809 2,662 2,590 (148) (71)

% of Net Sales 84.9% 88.7% 90.1% 3.8 pts 1.4 pts

Gross Margin 501 339 284 162 56

% of Net Sales 15.1% 11.3% 9.9% 3.8 pts 1.4 pts

Total SG&A 372 339 332 (33) (8)% of Net Sales 11.2% 11.3% 11.5% 0.1 pts 0.2 pts

Amortization 4 4 4 0 0

Operating Profit 125 (4) (52) 128 48

% of Net Sales 3.8% (0.1%) (1.8%) 3.9 pts 1.7 pts

Net Hedge / FX (1) (7) (6) 5 (1)

All other OIOE (3) (4) (45) 1 41

IC OIOE 0 0 (1) 0 1

EBIT 120 (14) (104) 135 90

EBIT % of Net Sales 3.6% (0.5%) (3.6%) 4.1 pts 3.1 pts

Financial Performance


2014 PLAN IS A KEY MILESTONE TOWARD LRP OBJECTIVES

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EMEA EOP BY BUSINESS

EOP 2013 OL 2014 PP

MDA $ (115)M $ 0M+$115M

SDA $ 63M $ 74M+$ 11M

CS $ 47M $ 50M+$ 3M

EMEA $ (4)M $ 125M+$ 129M


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EOP CROSSOVER OL13 TO PP14


EOP PP

2014

125

CS

3

SDA

11(13)

BD/Ins.

(2)

Rev. Gen.

(21)

Restr.

benefits

33

P4G

30

PMR

51

Volume

39

EOP

2013 OL

4

Special

Projecst

EOP (US $ M)

- 0.1% 3.8%EOP, % ofNet sales

Includes US $10M

of PMR related to

R/S activities

AGGRESSIVE PLANS IN ALL LEVERS TO BRING OUR MDA BUSINESS TO BREAK-EVEN

MDA

773K

units

2013=1.4%

2014= 2.0%

MDA improvement of US $115M

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EMEA TOTAL VOLUME

MDA INCREMENTAL VOLUME +775K


'000 units 2013 2014 % Delta

MDA / CS 11,115 11,890 7.0% 775

Total BI 4,565 5,035 10.3% 470

Total FS 6,476 6,779 4.7% 303

CS 74 76 2.7% 2

SDA 741 990 33.6% 249

TOTAL VOLUME 11,858 12,881 8.6% 1,023

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INDUSTRY AND WHIRLPOOL EVOLUTION 2012-2014

98 97 96 94 96 95 94Whirlpoolprice index

0.0%0.0%0.0%0.0%0.0%0.0%0.0%

-2.0%

-5.0%

0.2%

-0.4%

-2.3%

-0.8%

-2.0%-1.1%

8.6%8.7%8.6%8.5%8.4%8.3%

8.4%8.4%8.3%8.2%8.0%8.1%

7.7%7.9%8.3%

Q1

ActQ2

ActQ3

ActQ4

ActFY

Act

Q1

OLQ2

OL

ASSUMING FLAT INDUSTRY IN 2014, GROWTH IN BOTH MARKET SHARE AND PRICE INDEX

Indutry Sales units, % change vs. LY

Whirlpool Market share, %

1, Data for July and August, September data from GfK will be available end of NovemberSource: GfK, MDA-9, EU-23

95 94 94

Q3

OLQ4

OLFY

OL

2012 2013

95 96 97 96 96

2014

Q1

ActQ2

ActQ3

Act1Q4

OLFY

OL

Outlook

FY

2012

FY

2013

FY

2014


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MDA VOLUME BY COUNTRY

Volume (Ths. units) PP 2014 2013 OLVs. 2013 OL

(units)Vs. 2013 OL (%)

Northern Europe 862 799 62 7.8%

Benelux 655 626 29 4.6%

Germanics Area 1.755 1.670 85 5.1%

Switzerland 173 158 15 9.4%

NORTH AND CONTINETAL REGION 3.445 3.254 191 5.9%

France 1.675 1.604 71 4.4%

Italy 1.220 1.220 - -

Iberia 190 176 14 7.7%

Greece 85 75 10 14.0%

WEST & SOUTH REGION 3.170 3.083 87 2.8%

Poland & Baltic 677 608 69 11.3%

Central Europe 431 398 34 8.5%

Poland. Baltics & Central East 1.108 1.006 103 10.2%

Eastern Europe Region 422 378 44 11.6%

South East Europe 329 306 22 7.3%

EAST & SOUTH EAST EUROPE AREA 751 685 66 9.6%

ME & NWA AREA 852 811 41 5.0%

South Africa 720 620 100 16.1%

IKEA 1.510 1.345 165 12.2%CENTRAL. EAST & MEA REGION 4.941 4.467 474 10.6%

OEM 228 214 14 6.7%

Total MDA 11.784 11.011 773 7.0%

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MDA MILC CROSSOVER 2013 TO PP 2014

Positive mix driven by:

Product mix in every country

Built in growth plan

Dish growth New product launches: Dragon88/ Fjord project

Net Price Increase +1%LFL

Mix

(12)

TPI MILC

FY 2014

641

Mix

53

32

Volume

39

CPU Log.

4

FX

(11)

MILC

FY 2013

536

LfL

MILC (US $M)

14

DETAILED PMR PLAN DEFINED FOR EACH COUNTRY AT A TRADE PARTNER LEVEL



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2014 PROFIT PLANP4G

IMPORTANT COST REDUCTION CRITICAL TO DELIVER 2014 OBJECTIVES

Million $ Q1 Q2 Q3 Q4 FY

Materials + FPS 8.4 7.8 10,2 10.9 37.2

Conversion 0.7 3.9 4.0 3.2 11.7

O&T Capitalization (6.4) (9.0) 1.7 2.9 (10.9)

Freight & Warehouse 0.8 1.0 1.1 1.1 4.1

Quality 1.3 1.3 1.3 1.3 5.3

OCOS (1.1) 0.5 (0.6) 0.7 (0.4)

Corporate recharge (0.6) (0.6) (0.6) (0.6) (2.4)

PEP - (2.6) (3.2) (1.9) (7.6)

Infrastructure (2.2) (1.7) (2.3) (0.6) (6.8)

P4G MDA 0.9 0.5 11.6 17.2 30.3Material 0.4 0.4 0.4 0.4 1.6

Logistics 0.3 0.3 0.3 0.3 1.2

Quality (0.3) (0.3) (0.3) (0.3) (1.3)

Infrastructure (0.6) (0.7) (0.7) (0.9) (2.9)

P4G SDA (0.3) (0.3) (0.4) (0.5) (1.5)

EMEA P4G 0.7 0.2 11.2 16.7 28.8

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EMEA PP2014FULL YEAR FCF

NET EARNINGS AND WORKING CAPITAL MAIN DRIVERS OF CASH GENERATION

US$ Million

2012

Actual

2013

Outlook

2014

P.Plan

Net Earnings ($95) $0 $85

Amort/Deprec $115 $92 $102

Funds from Operations $20 $92 $187

Receivables ($49) $12 ($40)

Inventories $13 $14 $50

Payables ($44) $12 $44

Working Capital ($79) $39 $54

Other Op Accounts $35 $4 $31

Restructuring $13 $31 ($28)

Cash from Op.Cycle ($11) $166 $245

Capital Expenditure ($88) ($101) ($135)

Free Cash Flow ($99) $65 $110

FCF % of NS %(3.0) %2.2 %3.3

FULL YEAR

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EMEA P&L PP14 BY QUARTER

Q1 Q2 Q3 Q4 FY

Mln US$ PP 2014 PP 2014 PP 2014 PP 2014 PP 2014

Units 2,831 3,137 3,349 3,564 12,881

Net Sales 736 813 859 902 3,310

ASV 260.1 259.2 256.4 253.2 257.0

Cost of Sales 639 699 720 751 2,809

% on Net Sales 86.8% 85.9% 83.9% 83.3% 84.9%

Gross Margin 97 114 138 151 501

% on Net Sales 13.2% 14.1% 16.1% 16.7% 15.1%

Total SG&A 88 96 92 96 372

% on Net Sales 12.0% 11.8% 10.7% 10.7% 11.2%

Amortization 1 1 1 1 4

Operating Profit 8 17 46 54 125

% on Net Sales 1.1% 2.1% 5.3% 6.0% 3.8%

Net Hedge / FX (0) (0) (0) (0) (1)All other OIOE (1) (1) (1) (1) (3)

IC OIOE 0 0 0 0 0

EBIT 7 16 45 53 120

EBIT % of Net Sales 0.9% 2.0% 5.2% 5.9% 3.6%


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EMEA P&L SEQUENTIALQ1 14 VS. Q4 13

Q1 Q4 vs OL'13

Mln US$ PP 2014 OL 2013 B / (W)

Units 2,831 3,313 (482)

Net Sales 736 824 (88)

ASV 260.1 248.6 11.4

Cost of Sales 639 727 88

% of Net Sales 86.8% 88.2% 1.5 pts

Gross Margin 97 97 0

% of Net Sales 13.2% 11.8% 1.5 pts

Total SG&A 88 86 (2)

% of Net Sales 12.0% 10.4% (1.6) pts

Amortization 1 1 (0)

Operating Profit 8 10 (2)

% of Net Sales 1.1% 1.2% (0.1) pts

Net Hedge / FX (0) (0) (0)

All other OIOE (1) (1) 0

IC OIOE 0 0 (0)

EBIT 7 9 (2)

EBIT % of Net Sales 0.9% 1.1% (0.2) pts


MDA (485)Ku

Material: 4.7m$

Conversion: 2.0m$

Expenses: 0.7m$ 13= 0.6%14= 1.7%

19

PMR CROSSOVER Q4 2013 TO Q1 2014EMEA PROFIT PLAN 2014


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PMR CROSSOVER Q4-2013 TO Q1-2014

MILC

Q1-2014

146

Mix

14

TPI

5

LfL

6

Volume

(13)

MILC

Q4-2013

134

MILC (US $M)

VOLUME SEASONALITY MORE THAN OFFSET BY PMR ACTIONS

47

MILC/

unit (US $) 55

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AGENDA




Sidnei Sanches


Q&A All

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AMBITION TO REGAIN NUMBER TWO POSITION IN BUILT IN BY 2017


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AMBITION TO REGAIN NUMBER TWO POSITION IN BUILT-IN BY 2017

*Including IKEASource: Whirlpool internal data, GfK data, BCG analysis

#3 in EMEA Built-in market... ... #2 in EMEA Built-in market

13% market share*... ... to 16% - 17% market share

4.6 million sold units... ... 6.0 6.5 million sold units

750 million Euro net sales... ... 1 1,1 billion Euro net sales

5 million Euro operating profit... ... 90 100 million Euro operating profit

to 2017From 2013E...

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CONSUMERS FAVOR BI APPLIANCES OVER FS DUE TO AESTHETICS

Purchased MDA product categories and reasons for choice of BI / FS"Which appliance did you buy? As free-standing (FS) or Built-in (BI)?" "Why as free-standing or Built-in"

35%

8%

9%

13%

34%

23%

14%

16%

65%Microwave

oven

23%

Hobs 80%

Ovens 78%

Dishwasher 70%

Refrigerator /

Cooler31%

4%

Source: 80 interviews with consumers from Italy, France, Germany and Poland who bought a kitchen within the last three yearsconducted September 2013; BCG analysis

Why FS:"Elegancy of the appliance", "Too big to built it in", "Price"

Why BI:"Predefined in kitchen layout"

Not boughtBought as FSBought as BI

Why BI:

"Predefined in kitchen layout" "Space optimization"

"Esthetics"

Why FS: "Flexibility with regards to position"

Why BI: "Predefined in kitchen layout", "Esthetics"

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AS A CONSEQUENCE BI GAINING SHARE OVER FS


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AS A CONSEQUENCE, BI GAINING SHARE OVER FS

FranceItaly Germany PolandConsumer behavior

7.46

35%

65%

6.63

33%

2008

67%

2012 2012

74%

11.92

25%

2008

75%

13.07

26%

11.99

2008

43%

54%

57%

13.89

46%

2012

69%

31%

2008 2012

4.08

78%

4.35

22%

Built-in

Free-standingMDA1market vol.(in Mn. units)

1. MDA 9 product categories excluding hoods 2. Based on 80 interviews per market with consumers who bought a kitchen within the last three yearsconducted September 2013Source: GfK, Consumer research, BCG analysis

More and more built-

in product offerings in

relevant price set for

consumers

Exception Italy:

postponement of

kitchen investments

due to macro-

economic downturn

Built-in preferred to

freestanding mainly

due to esthetics2

Development of Bshare since '08

25
http://upload.wikimedia.org/wikipedia/commons/1/12/Flag_of_Poland.svghttp://upload.wikimedia.org/wikipedia/commons/b/ba/Flag_of_Germany.svghttp://upload.wikimedia.org/wikipedia/commons/c/c3/Flag_of_France.svghttp://upload.wikimedia.org/wikipedia/commons/0/03/Flag_of_Italy.svg


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ONLINE DEVELOPED INTO MAIN INFORMATION SOURCE AS SALES


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Across countries, online most important infor-mation

source (exemplary for BI hob purchase1

)...

... and online sales growing rapidly since 2010 (total

volume of focus countries in Mn. units)

In-store

information 18%

Brochures &

catalogues17%

General

magazines9%

Family andfriends

14%

Sales

assistant35%

Internet 51%

1. Which of the following sources of information did you use to gather information about your current built-in hob? 2. And what kind of internet website did you visit to gather information?Source: Research Plus Study: Cooking U&H Hob Shopper Insight, Feb 2012 (Quantitative web survey with structured questionnaire of 20min, carried out in last 2 weeks of November 2011);GFK data as of end of 2012MDA 9 excluding hoods ; BCG analysis

Traditional

sales

Internet

sales

2012

13.3

11.8

(89%)

1.5

(11%)

2010

12.4

11.5

(93%)

0.9

(7%)

Share of online sales

1% / 32k units

16% / 563k units

10% / 613k units

25% / 311k units

ONLINE DEVELOPED INTO MAIN INFORMATION SOURCEAS SALES

CHANNEL ALSO GROWING RAPIDLY

+625k

27

THREE TYPES OF GROWTH CONSIDERED TO PROJECT 2017 SALES
http://upload.wikimedia.org/wikipedia/commons/1/12/Flag_of_Poland.svghttp://upload.wikimedia.org/wikipedia/commons/b/ba/Flag_of_Germany.svghttp://upload.wikimedia.org/wikipedia/commons/c/c3/Flag_of_France.svghttp://upload.wikimedia.org/wikipedia/commons/0/03/Flag_of_Italy.svg


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Capture market growthAssumptions on market growth modeled for each channel

and country with market teams

Graph illustrative

20172013

THREE TYPES OF GROWTH CONSIDERED TO PROJECT 2017 SALES

Gain share

Defined bottom-up together with market teamsdraft list of

focus trade partners per initiative defined

Gain share

IKEA

Benefit from organic IKEA growth

Three volume growth types

Capture

market growth

One market execution plan

Source: WHR / BCG BI growth project team

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4 SHARE-GAIN INITIATIVES AND 4 ENABLERS WILL CREATE BI


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Initiative Description

Optimize brand

portfolio

Position KAid at attractive price pointin the premium segment' to tap larger part of

high-end market & deploy optimized brand portfolio

Gain share

initiatives

Enablers

Grow volumes with

selected trade partners

Gain volume through few selected trade partner dealsleveraging on our Value

Brands (e.g. co-operation with pan-EU DIY or local large furniture trade)

Leverage retail / online

growth

Benefit from Retail/Online BI growth with a dedicated replacement offering,

supported by a differentiating 360 degree campaign

Leverage Online /

Digital

Optimize own website(including e.g. planning tools) to capture and steer consumers

in new purchase-path

Identify strong players to 'run with the runners'and support them to succeed in the

marketplace

Ensure sustainable

product leadershipContinuously update product line-upacross all categories and manage quality

Reinforce consumer &customer perception

Meet rising expectations re availabilityand service leveland ensure appropriatelevel of brand invest

Conduct changes to

organizational

structure

Implement structural changes on organizational level(central and in markets) to

enable WHR's sales organization to exploit the potential

4 SHARE GAIN INITIATIVES AND 4 ENABLERS WILL CREATE BI

LEADERSHIP

A

B

C

D

E

F

G

H

Capture selected "high-

volume" accounts

Sustain profitable

Kitchen specialistbusiness

Source: WHR / BCG BI growth project team

29

VOLUME PROJECTED TO GROW FROM 4 6M TO 6 3M UNITS


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VOLUME PROJECTED TO GROW FROM 4.6M TO 6.3M UNITSNET SALES TO INCREASE FROM 725MTO 1,1BN

263

222

210

Volume (in k units)

6,500

6,000

5,500

5,000

0

Baseline 2013

Market growth

IKEA

A: KitchenAid

B: High volume

C: Retail growth

D: Sustain Kitchen

2017

6,260

4,606

160

500

300

2013

4,606

A

B

C

D

1. Assumed to take 40% of additional Wh irlpool volumes above market growth from Electrolux (incl. Electrolux IKEA business), 30% from value brand players, 20% from BSH; stretch caseNote: PMR impact included on base business as outlined in LRPSource: WHR / BCG BI growth project team

Resulting BI market position and

market shareVolume and value projection

725

45

56

57

46

789

26

46

1,064 xx Net sales (in m)2013 2017

#1 ~26% ~25%

#2 ~17% ~16%

#3 ~13% ~15%

Gain share from1:

Electrolux

DeDietrich

Neff/Siemens

Other value brandplayers

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AGENDA


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AGENDA




Sidnei Sanches


Q&A All

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Documents

Leadership Conf Nov 26 2014 - Final