Letter to Shareholders A Message from Marc Bitzer,
Chief Executive Officer

In October 2017, it was my honor to accept the Whirlpool Corporation Board of Directors’ appointment as the eighth Chief Executive Officer in this great company’s 106-year history. I want to use my first letter to shareholders as an opportunity to share some thoughts about this recent transition, our long-term commitment to shareholder value creation and corporate responsibility, as well as our current business performance and outlook for 2018.

Leadership Transition

At Whirlpool, we firmly believe that leadership is the catalyst for positive change. I clearly remember the moment I first said “Yes, I want to work at Whirlpool,” more than 18 years ago. I did so because I wanted to work for a company recognized for its exceptional values and strong leadership principles. Those same values and principles inspire and guide me to this day.

Our values and principles are exemplified by Jeff Fettig, who spent his entire 36-year career with Whirlpool Corporation. Jeff brought great vision to Whirlpool, and during his tenure we became the number one major appliance manufacturer in the world. In his 13 years as CEO, Whirlpool’s revenues increased approximately 75 percent and both the company’s market value and dividend more than tripled. Jeff led by example, equally passionate about winning in the marketplace as he was about doing things the right way.

I look forward to building on the strong foundation Jeff has put in place. The exceptional values and strong leadership principles that have guided us throughout our history will continue to be a catalyst for success in the future. I am committed to protect and further advance them for the next generation of Whirlpool employees, customers and shareholders.


Unique Global Strategic Position

As a global company, we believe we are uniquely positioned, today and in the future, to deliver long-term value for you. We believe we have the best brand portfolio in our industry, and are proud to have seven brands which each generate more than $1 billion in sales. Our portfolio of timeless brands like Whirlpool and KitchenAid are increasingly desired throughout the world. Trusted brands and differentiated features matter more than ever, especially when designed for local consumer preferences.

Legacy of Innovation

We have a proud legacy of innovation and our exceptionally strong innovation pipeline allowed us to launch more than 100 new products this year. As technology continues to advance, the wants and needs of consumers are changing. In turn, the appliance industry is evolving and becoming less and less commoditized. Today’s consumers are demanding connected appliances as part of a home ecosystem that simplifies their lives. Whirlpool Corporation is answering that demand. We have partnered with leaders in the connected home, and we see many exciting opportunities for future growth in the connected space.

Global Leading Manufacturer

Through the strength of our winning brands and innovative products, we have become the world’s leading global appliance manufacturer.(a) We are the leading manufacturer in seven out of the ten largest countries in the world,(b) which provides us a cost advantage. We have a strong presence in both developed countries and emerging markets, and are well-positioned to benefit as demand recovers in key emerging markets like Brazil, China and Russia.

Best Cost Position

Our global scale allows us to efficiently produce the right products at the right time anywhere throughout the world. We have strong capabilities for cost takeout, which is key to effectively cope with macroeconomic challenges. By combining leading scale with disciplined cost management, we have a true “best cost position” in the highly competitive global appliance industry.

It is this unique global position which gives us confidence that we will deliver long-term results that are second-to-none in our industry.

Commitment to Shareholder Value Creation

Our commitment to shareholders remains a constant. We communicated our value creation goals at our 2017 Investor Day, and my entire leadership team and I are fully committed to these goals:

  • 3-5% annual organic net sales growth
  • 10% EBIT margin by 2020
  • 5-6% free cash flow as a percent of net sales by 2018

We are equally committed to our balanced approach to capital allocation. From 2012 to 2016, we invested more than $6 billion in our business, including more than $3 billion in capital expenditures and more than $2 billion in acquisitions. During that same period, we returned $2.3 billion to shareholders, including $1.1 billion in dividends and $1.2 billion in share repurchases.

This year, we invested approximately $680 million in capital expenditures to fund innovation. We also continued to return strong levels of cash to shareholders, including more than $300 million through our increased quarterly dividend, and $750 million in share repurchases, an increase of more than 40 percent versus 2016.


Commitment to Corporate Responsibility

At Whirlpool, we are committed to being a responsible corporate citizen, both because it is the right thing to do and because it is good for business. This year, we furthered that commitment by taking a number of steps to minimize our impact on the environment while also supporting our employees and the communities in which we live and work.

Our focus on conserving our planet’s resources continued this year. We met our 2020 goals for energy and water usage three years early, and will set new sustainability goals which will exceed the original U.S. commitments to the Paris climate accord. We also expanded our use of on-site renewable energy, including our wind turbine program in Ohio and solar program in India, and are one of the largest on-site users of wind energy in the U.S. Further, we continued to manufacture increasingly water- and energy-efficient, high-performing products, helping consumers lessen their impact on the environment while also saving money.

We also strengthened our commitment to being a great place to work. In 2017, our people recognized the company with an engagement score of 85, which surpasses global consumer product companies and ‘best in class’ companies. Our strongest scoring questions are around connecting individual work to achieving results and belief in the goals and objectives of the company.

Finally, we remain passionate about giving back to our communities, both through employee volunteerism and by supporting numerous charitable organizations, including Habitat for Humanity International®, United Way®, the Boys and Girls Clubs of America® and Instituto Consulado da Mulher®.(c)

2017 Business Performance and 2018 Outlook

We delivered record revenues and this was our second highest year ever in terms of ongoing earnings per share. I would describe it as a “good” year, but not a “great” year. We are dissatisfied with our results for two reasons. First, we committed to delivering better results to our shareholders, and the challenges we faced caused us to revise our outlook throughout the year. Second, we simply believe we could have done better and achieved “great.”

To give you a bit of perspective on the operating environment, it’s important to note that raw material costs rose much faster than expected, turning into a $600 million challenge for 2017 and 2018 combined. Our results were also impacted by lack of progress on our European and China integration activities. These two combined factors led to a performance shortfall against our targets.

To offset these challenges, we have taken strong and decisive actions. We implemented cost-based price increases across the majority of our business early in the year, and have committed to a net fixed cost reduction of $150 million, which is already over 80 percent implemented. I firmly believe these are the right actions and that we have the right strategy to deliver improved performance in 2018 and our long-term goals.

Thank you for your investment in Whirlpool Corporation. It is truly a privilege to serve you and our employees as the eighth CEO of Whirlpool Corporation, and I am committed to earning your trust in this role as we build a bright future together in 2018 and beyond.

Marc Bitzer
Chief Executive Officer

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