Whirlpool Announces Divestiture of International Operations, No Impact on Dividend Expected

Following a nine-month strategic review of its business, Whirlpool announced plans to divest most of its operations across Europe, the Middle East, and Africa.

These international businesses accounted for around 20% of Whirlpool's sales but have been a drag on earnings, generating a net loss of around $80 million through the first nine months of last year (most recent data available) and $30 million in 2021.

Shedding these operations is expected to boost Whirlpool's free cash flow by around $250 million a year despite the headline revenue loss. Brand licensing fees and any dividend payments from a new joint venture that will hold some of these assets will generate incremental cash flow as well.

Whirlpool's business update also contained adjusted EPS guidance for 2022 that implies a full-year payout ratio of around 35%.

And despite industry headwinds as the cooling housing market slows demand for appliances, management expects similar operational performance in 2023. This suggests Whirlpool's dividend will remain reasonably covered.

With solid dividend coverage and no change to the prominent appliance makers' long-term outlook, we are reaffirming Whirlpool's Safe Dividend Safety Score.

Whirlpool plans to provide forward-looking guidance later this month. We will provide an update if any new information changes our long-term outlook.