Letter to

A Message from Marc Bitzer,
Chairman and
Chief Executive Officer

Dear Shareholder,

During this past year we saw a public debate around “shareholder versus stakeholder” and the purpose of companies. At Whirlpool, we consider all stakeholders, but never at the expense of our long-term shareholders. This principle has guided our company for 108 years and will do so in the future.

The very same principle is the reason why we adopted ESG policies more than 50 years ago. To illustrate this, I would like to share a quote from Elisha Gray in his annual letter to shareholders from 1969:

“1969 saw continuation of determined efforts on the part of Whirlpool and its subsidiaries to make meaningful contributions to the improvement of the social climate in the communities where our facilities are located. We have long held that no business can separate itself from the affairs and problems of the society of which it is a part and hope to grow and prosper.”

The current debate was brought about by the Business Roundtable statement on company purpose that was signed by nearly 200 U.S. CEOs, including myself. This public commitment to lead our respective companies for the benefit of all stakeholders—our customers, employees, suppliers, communities and shareholders—includes the following tenets:

Bar Chart showing Whirlpool Total Annual Revenue for 2017 through 2019.
Line Chart showing Whirlpool ongoing EBIT margin for 2017 through 2019.
Bar Chart showing Whirlpool return on investment capital for 2017 through 2019.
Bar Chart showing Whirlpool free cash flow for 2017 through 2019.
  • To our consumers, we commit to meeting or exceeding consumer expectations.

  • To our employees, we commit to fair compensation, benefits, training/development, and to provide a work environment that fosters inclusion and diversity, dignity and respect.

  • To our trade customers, we commit to innovative, quality products.

  • To our suppliers, we commit to a fair and ethical working relationship.

  • To our communities, we commit to respecting all people and protecting the environment.

  • And finally to our shareholders, those who help our company invest, grow and innovate: we commit to generating long-term value, transparency and effective engagement.

Turning to 2019, I’m very pleased to confirm that we are indeed generating long-term value for all those investing in Whirlpool Corporation and remain true to our mission of earning trust and creating demand for our brands. Let me share a few highlights of the year and our outlook for the future.

2019 in review

In short, our employees delivered yet another all-time record earnings per share and achieved a TSR which was well ahead of the broader market.

The business environment we faced during 2019 was unique compared to the prior year, presenting us with both positives and negatives. On the plus side, we saw a slowdown of the broader inflationary pressures which burdened us for the past two years. Raw materials have started to moderate and tariffs, while still being a headwind for us, have stabilized. At the same time, consumer demand remained subdued in most major markets throughout the world with the notable exception of India and Brazil during the latter half of the year.

From a regional perspective North America had another very strong year with EBIT margins of close to 13%, while we finally saw the signs of a successful turnaround in Europe during the back half of the year. Both India and Brazil demonstrated strong performance in a positive demand environment, while our China business was challenged with a market decline and the increased brand investments to facilitate the growth of the Whirlpool brand.

Despite softness in the demand environment, we remained focused on our operational priorities, executed our price increases and started to successfully reduce our cost base. All while increasing investments in our brands and products. The rigor in our operational execution throughout our global operations allowed us to deliver yet another all-time record year—both from a GAAP earnings per share of $18.45 and from an ongoing earnings per share of $16.00(c). This strong performance also showed up in Free Cash Flow of $912M (~7% improvement versus prior year).

Long-term shareholder value creation in 2020

In May of 2019 we had the opportunity to present our plans for long-term shareholder creation to the investor community. Our long-term goals include:

  • ~3% annual organic net sales growth

  • ~10% EBIT margin

  • 6%+ free cash flow as a percent of net sales

  • 12-14% return on invested capital

As evidenced during last year, we are getting close to driving the organic sales growth and the levels of free cash flow we had committed to. We improved our ongoing EBIT margin 60 basis points and made progress toward our long-term margin targets, however, we still have work ahead of us to reach our 10% EBIT target. It’s important to reiterate that Whirlpool Corporation is structurally able to deliver our 10% EBIT target for two reasons: our unique structural position and our long-term globally aligned strategic imperatives. These factors give us a competitive advantage over every competitor in our industry.

Marc Bitzer, Chairman and Chief Executive Officer

Our unique structural position is based on four fundamental pillars:

  1. Our strong global competitive position. We hold the top share position in six of our ten largest countries by revenue.

  2. Best brand portfolio. We have six brands with more than $1 billion in sales and the breadth of our portfolio allows us to target multiple consumer segments in the countries we serve.

  3. Legacy of innovation. Our heritage of consumer relevant innovation and continued investment in our product pipeline allowed us to launch more than 100 new products each year, and we are even more excited about our future product pipeline.

  4. Best-cost position. By combining our leading scale and strong cost discipline, we have a true “best-cost position” across the home appliance industry.

Our long-term, globally aligned strategic imperatives include:

  1. Deliver product leadership. With the changing competitive landscape it is more important than ever to lead the market with innovative, leading-edge designed products. Our product development organization has shifted to a global platform approach which allows us to reduce complexity and leverage our global scale.

  2. Re-define what product is. Even though the adoption rate of IoT-based products is still low, we are committed to be at the forefront of this development and lead the industry with consumer-relevant product and service solutions.

  3. Winning the digital consumer journey. The advent of digital technologies has fundamentally changed both the consumer pre-buy process as well as the actual purchase process. We have built in-house digital capabilities to take full advantage of this change in consumer behavior.

  4. Reinvent our value chain. World-class manufacturing, digital and industry 4.0 technologies in our factories allow us to make a step change in sustained cost and quality competitiveness. Furthermore, we are re-looking at how home delivery and consumer service platforms become a competitive advantage in the “digital” consumer purchase process.

Our short-term priorities for 2020

After more than 100 years in the appliance business, we understand the importance of being agile and prepared to succeed despite any type of volatility the market throws at us. Whirlpool Corporation has proved time and time again that we are able to effectively balance our long-term imperatives and short-term operating priorities to win for our shareholders. We are in excellent position from a balance sheet perspective, we remain very disciplined in keeping fixed costs low and carefully weigh our investment decisions.

We are optimistic about what lies ahead in 2020. The fundamentals of the U.S. and global economy are still robust and we have long argued that the U.S. housing market has been structurally undersupplied for almost ten years. In fact, we finally saw a significant uptick of the leading indicators for the U.S. housing market during Q4 of 2019. With this in mind we have set our operational priorities accordingly and feel well prepared for any economic scenario, while at the same time continuing to invest resources in our long-term strategic imperatives.

Thank you

Your trust in Whirlpool Corporation allows our 77,000 employees to improve life at home for families around the world. Thank you for your continued support and we are looking forward to a very successful 2020.

Marc Bitzer signature

Marc Bitzer
Chairman of the Board and Chief Executive Officer


(b) See table on page 128 of the 2019 Form 10-K for a reconciliation of the non-GAAP financial measure ROIC.

(c) See table on page 21 of this annual report for a reconciliation of the non-GAAP financial measure Ongoing Earnings Per Share.

Total Annual Revenue
2017 $21.3 Billion
2018 $21.0 Billion
2019 $20.4 Billion
Ongoing EBIT Margin
2017 6.40%
2018 6.30%
2019 6.90%
Return on Investment Capital(b)
2017 8.4%
2018 9.4%
2019 9.5%
Free Cash Flow
2017 $707 Million
2018 $853 Million
2019 $912 Million