September 13, 2011

Whirlpool Corporation 

 

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and related products for kitchen use. The products are designed for a somewhat higher-end consumer 

who has a greater appreciation for professional grade characteristics. 



 

Brastemp: Brastemp has been a provider of kitchen appliances in Brazil for over 60 years. It started a 

partnership with Whirlpool in 1957 and became a part of the Company in 1997. The brand holds a 

market-leading position among Brazilian consumers in terms of awareness, preference, and loyalty. 

Brastemp seeks to differentiate itself through cutting edge technology and design. 



 

Embraco: Embraco is a leading manufacturer of compressors (a key component for refrigerators), 

typically utilized for both household and commercial purposes. Embraco is headquartered in Brazil, but 

it has a manufacturing and sales presence throughout the world. 



 

Consul: Consul appliances have been a part of the Brazilian market since the 1950s, and are now 

found in nearly 60% of Brazilian households. The Consul brand had historically been associated with 

relatively simple ovens and refrigerators. However, the product line has expanded to include portable 

appliances such as microwaves, vacuums, and water purifiers.  

The Other Brands: 



 

Jenn-Air: Jenn-Air was founded in 1947, and was acquired by Whirlpool in 2006 (it was owned by 

Maytag at the time). The Jenn-Air products are kitchen products, differentiated through industry-

leading design and technology. This brand targets a more high-end, style-conscious buyer relative to 

the other parts of the Whirlpool portfolio. 



 

Amana: Amana was founded in the 1930s, and has extended its operations to include both kitchen 

and laundry appliances. Amana was acquired by Whirlpool as part of the Maytag acquisition in 2006. 

Amana products are designed to be simple, and relatively lower cost.  



 

Bauknecht: Bauknecht was founded in the mid-20

th

 century in Germany, and became part of Whirlpool 

in 1989. This brand is focused on providing kitchen and laundry appliances that are distinguished by 

their technology and modern design. This brand’s primary presence is in Central and Northern Europe. 



 

Gladiator: The Gladiator GarageWorks brand was launched by Whirlpool in 2003. The brand is 

focused on garage organization and storage products. Management launched this category in 

response to customer feedback, and perceived growth opportunities for both domestic and overseas 

markets. Gladiator is expected to have a presence in 10 countries by the end of 2011.   

The Company’s global distribution capability further differentiates WHR from its industry peers. The 

Company has long-established relationships with major retailers that sell home appliances (Lowe’s, Home 

Depot, Sears, etc.). Importantly, WHR holds relationships with major local retailers throughout its global 

footprint. Lowe’s represents WHR’s largest retail relationship, accounting for 10% of total sales in 2010. WHR 

typically holds the #1 or #2 share of appliance sales among retailers that distribute its products. In our view, the 

Company’s scale, innovation, and brand recognition should ensure that consumers will continue to seek WHR 

products when visiting their local retailer. However, it should be noted that the majority of WHR contracts with 

retailers are short-term in nature; these trade customers have meaningful leverage with WHR and other 

appliance providers and can adjust orders and shelf space as market conditions warrant.  

Navigating the Current Challenges 

Demand for WHR’s products is sensitive to several factors including housing fundamentals and overall 

consumer confidence. Although conditions in several emerging markets remain favorable, the Company still 

relies on the developed markets of North America and Europe for the majority of its revenue. Roughly 50% of 

appliance purchases in the United States stem from replacement of existing units, 27% are classified as 

discretionary, and the remaining 23% are driven by sales of new and existing homes. Clearly, the weak 

fundamentals for U.S. real estate and overall consumer sentiment represent key near-term challenges. 

Industry data regarding U.S. appliance shipments remain weak. During the most recent quarter, industry 

shipments declined 10% year-over-year, reverting to 2009 levels (see chart). 

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Whirlpool Corporation 

 

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U.S. Industry T7

 

Unit Shipments 

 

Source: Company presentation, July 21, 2011 

 

As a result of weak sales trends and increasing raw material costs, WHR’s margins have come under 

significant pressure. Management has taken several steps to mitigate these margin pressures, and create a 

more profitable Company for the long-term. Since the economic downturn, WHR has pursued several initiatives 

that address the Company’s overall efficiency and cost structure. WHR has reduced its total number of 

manufacturing centers by over 20% since 2006. SG&A levels have also been well controlled, SG&A as a 

percent of sales was 8.7% in 2010, down from a pre-recession level of 9.4% (Even more impressive when 

considering the weakening sales trends). In addition, the Company has implemented several price increases to 

offset cost pressures from raw materials. These collective measures, combined with reduced promotional 

activity are expected to yield sequential improvements in margins during the second half of 2011. 

Although near-term margins may show some stabilization and improvement, overall profitability will still 

be depressed when evaluating financial results from a longer-term perspective. The following chart helps to 

illustrate the level of recent profitability relative to historical ranges. 

WHR Operating Margins 

6.8%

5.7%

5.5%

4.6%

5.5%

2.9%

4.0%

5.5%

4.9%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

2003

2004

2005

2006

2007

2008

2009

2010

2011-

YTD

 

 

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