A Message From Marc BitzerChairman and Chief Executive Officer
2020 was a year like none before. Starting with the unfolding of events in January, the pandemic has kept a firm grip on our world and our company. Many of our global operations have been at the epicenter of the pandemic, be it in China or in our northern Italy manufacturing facilities.
An unforeseen crisis of this magnitude does not come with a “leadership manual” and is a test of the character of an organization. I am tremendously proud of how our leaders and colleagues throughout the world rose to the occasion and am particularly proud that we stayed true to our roots and committed to serving all our stakeholders.
Always paramount is our employees’ health and safety. We had many colleagues working tirelessly to turn large-scale operations into “COVID-safe” operations in a matter of days. We had our procurement teams scouting personal protective equipment for our employees when it was in short supply. Practically overnight, we built an infrastructure to monitor all COVID-19 cases globally and provide health and emotional support for all our people.
Equally important was our commitment to serve our consumers during the many lockdowns. Despite all the challenges, we did not have significant factory shutdowns and were able to provide essential products to our consumers even during the peak of the pandemic. Our service engineers went well beyond the call of duty and visited consumers' homes to repair and service our products.
We also stepped up in serving our local communities. We procured and donated millions of masks, gowns, sanitizers and other critical material to our local hospitals and front-line workers when they were not able to procure these materials themselves. We supported local organizations providing vital services to the most vulnerable in society, such as food banks, shelters and school meal programs.
The pandemic easily could have had devastating impacts on us from a financial perspective. Instead, what could have been a setback for us turned into the best year ever. COVID-related demand tailwinds, in particular during the second half of 2020 helped, but drove only a fraction of our outstanding financial results. Without a doubt, the early and decisive actions we took on the go-to-market and cost sides made all the difference. Many of these decisions were difficult and painful, yet necessary and impactful. Achieving an all-time record of ongoing earnings per share of $18.55(b) is certainly a remarkable accomplishment—and this makes the third consecutive year of all-time record earnings(b). We also made tremendous strides in delivering on our long-term value creation targets with an ongoing EBIT margin(b) of 9.1% (against our long-term target of 10%) and a free cash flow(b) of $1.2 billion (in line with our long-term target).
Despite the operational intensity with which we had to steer the business, we kept our focus on our long-term, globally aligned strategic imperatives.
- Deliver product leadership. With the changing competitive landscape it is more important than ever to lead the market with innovative, leading-edge designed products. The launch of our new global dishwashing platform, which ultimately will be produced in three of our global facilities (Findlay, USA, Radomsko, Poland, and Hefei, China), is a great example of true product leadership.
- Re-define what product is. Even though the adoption rate of IoT-based products is still low, we are committed to being at the forefront of this development and leading the industry with consumer-relevant product and service solutions. The launch of our Swash detergent, for example, coupled with the unique multi-dosing feature in select washers and our portfolio of IoT apps is a very encouraging innovation with true customer value.
- Winning the digital consumer journey. The advent of digital technologies has fundamentally changed both th e consumer pre-buy process as well as the actual purchase process. The pandemic has been a significant accelerator in this space, and we have been hugely successful in capitalizing on these trends—with our direct-to-consumer business rapidly approaching $1 billion in sales.
- 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. We are particularly pleased with our progress in creating best-in-class home delivery networks and in driving competitive advantage in our consumer service platforms.
In my letter to you last year, I laid out our longstanding commitment to ESG initiatives which date back to 1969 (and probably even longer). This year we made significant progress toward our ESG goals, and we are very proud of the external recognition we received throughout the year:
- Rose to the No. 7 spot on Newsweek’s 2021 list of America's Most Responsible Companies
- Achieved a low risk score of 18.0 on Sustainalytics ESG Risk Rating
- Improved our S&P Global ESG Score to 63 and were named to the 2020 Dow Jones Sustainability Indices (DJSI North America Index for the 14th time in the last 15 years
- Awarded a perfect 100 on the Human Rights Campaign Foundation's (HRC) 2021 Corporate Equality Index for the 18th year in a row
We will continue to execute on our ESG initiatives and address challenges such as climate change and human capital management. We’ve set targets approved by the Science-Based Targets initiative (SBTi) for our emissions in both our plants and our products in use and will continue to enhance disclosure on topics relevant to our stakeholders through frameworks such as GRI, SASB and TCFD(d). As outlined in detail in our 2020 Sustainability Report, Whirlpool is uniquely positioned to both aid the energy transition and deliver compelling innovation with meaningful societal impact.
It is increasingly clear that the pandemic won’t be over anytime soon and that we might have to cope with the related challenges for some time to come. Having said that, we are very encouraged by the strong momentum we have been building in our business over the past quarters and years. We are equally confident in the strong consumer demand trends throughout the world—there is no doubt that this pandemic has led consumers to fundamentally reorient toward house and home or what we call “investing in nesting.” Our company's vision and purpose of “improving life at home” couldn’t be more fitting!
Your trust in Whirlpool Corporation allows our 78,000 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 2021.
Chairman of the Board
and Chief Executive Officer
(b) Please see "Non-GAAP Financial Measures" on pages 37-41 of our Form 10-K for a reconciliation of this Non-GAAP measure to the equivalent GAAP measure.
(c) Please see Financial Highlights for the applicable non-GAAP to GAAP reconciliations.
(d) Global Reporting Initiative (GRI), Sustainability Accounting Standards Board (SASB) and Task Force on Climate-Related Financial Disclosures (TCFD).