Whirlpool CEO Mark Blitzer, left, and his Arçelik counterpart Hakan Bulguru sign the new European appliance pact.
But disruptions and divestitures will impact 2022 financials
By Alan Wolf, YSN
Whirlpool said supply chain disruptions that hamstrung its North American business last year have begun to ease and are expected to “significantly improve” this quarter.
The company attributed the challenges to a “significant one-off supply chain disruption” in the fourth quarter of 2022 that primarily involved one critical supplier, but said the situation has since been resolved. However, the impediment impacted production volume and contributed to a 10% decline in net sales and a $1.54 billion net earnings loss for all of 2022, according to preliminary results.
However, most of the loss stems from a just-announced divestiture of Whirlpool’s European, Middle Eastern and African operations through a strategic pact with Turkish conglomerate Arçelik, parent of the Beko and Blomberg appliance brands. Whirlpool is selling its Middle East and Africa businesses to Arçelik outright, but the two manufacturers are creating a combined 6 billion Euro (€6B) appliance entity in Europe in which Whirlpool will own a 25% stake.
The deal will result in a fourth-quarter non-cash loss of $1.5 billion in net asset write-downs and currency adjustments, but is expected to deliver “net present value of future cash flows” of over $750 million in Whirlpool brand licensing and revenue from its minority interest, the company said.
The arrangement, which is expected to close in the second half of 2023, follows Whirlpool’s sale of its Russian operations to Arçelik last August.