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This is Bloomberg Business Week with Carol Messer and Tim Stenebek on Bloomberg Radio.
Looking at shares of Whirlpool, they're up about three quarters of one percent here in the aftermarket. This company also reporting earnings just moments ago. Of course, the owner of Maytag very other brands too, but lowered its full year earnings forecast as consumers continued to shy away from some of those big ticket appliance purchases amid a weakening housing market,
something we've talked about a lot here at Bloomberg. Adjusted earnings per year will be about twelve dollars this year, the company said, down from the thirteen to fifteen it had previously seen. Meantime, Alice were looking for about twelve dollars fifty six cents a share, according to our average projections compiled here at Bloomberg Company, though keeping its full year revenue estimate the same tim at sixteen point nine billion dollars.
Let's get to the chairman, President and CEO of Whirlpool, Mark Bitzer. He joins us from Michigan. Mark, good to have you with us, appreciate you joining us just after these numbers crossed the wire. Tell us about the quarter and specifically why you cut the earnings forecast.
Yeah, Tim and Carol. First of all, thanks for having me on the show again. You know, overall before we talk about the earnings for we actually feel good about our Q two you know, we we said also after the Q one call, this here is all going to be about margin expansion with every quarter, and Q two was a sizeable sequential margin improvement full point on a global level, led by all important North America business which ultimately relied also on getting better promotion pricing. So we
feel good about the progress we made. Yet at the same time, we also, you know, knowing the weakness of a housing market which is still emphasis on still just there. We don't see the housing market recovering as fast as we originally assumed, probably like everybody else when we entered the year. So we're still forecasting for Q three and Q four berber margin expansion and improvement. So we feel
good about the progression. It just not happening at the pace which we had originally in mind, and the market is not recovering at the pace which we already had in mind. But that's my only question when it happens, not if it happens. It will happen, but it just later when we originally assumed.
So, you know, I always feel like when we talk with you Mark, you know, we think about like the pre pandemic world, the pandemic world, and like our recovery. In terms of some of the numbers, the consumer trends, the buying patterns, is it below what we saw pre pandemic?
You know, Carol, you have two almost offsetting trends. One is the replacement market, which is very strong OSPAM or volume site, and that is ultimately tied to increase applient's usage following COVID and just all of the in home trends and people just spending more time in home. So replacement side is very strong. The unfortunate side from a business perspective, that typically doesn't come with a rich mix
because it's not a discretionary purchase. The discretionary side that is all tied towards how seeing existing home sales and new home sales, and that's the part which is way soft when anybody assumed at this point, and frankly also with the numbers which came out yesterday and existing home sales put back back to two or eight levels. I mean, it's kind of multi decade low. And of course that is the part of a business which tends to come with a richer mix for us, and that's the soft part.
So you have two offsetting trends which kind of overlay. I mean, we would, of course going forward, we love to see the replacement trend, but at one point you will see the recovery of discretionary side.
We've talked with you about this replacement versus you know, discretionary. What's the bigger part of your business? Is it people replacing items or saying, hey, I feel like doing this discretionary right now?
The replacement start as well over sixty percent, and put that in a storic context, I mean you typicate it for multi decades on around fifty or even below fifty percent. That doesn't sound like a whole lot, but it actually makes a big difference in how and how the mix comes through for your overall business. So again that's that's you know, we like the volume, but it it's not a very rich mix.
The biggest part of your your market or the biggest part of your business in terms of segments, refrigeration, laundry cooking a close third. Where are you going to? Where do you see the most growth?
You know, again, it's right now. Overall it's split on mechanicy it's large in replacement, so laundry is still very strong, refrigeration. The kitchen is still a little bit soft because that comes with a replacement or remodel of an entire kitchen. But you know, it's it's it's more behinhend the entire kitchen suite like Kitchen Aid suite or Danner suite, which is right now, software when we would expect in an rmous cycle.
All right, so we be remiss by not addressing the elephant in the kitchen or if you will. Last month, Whirlpool shares you know, jumped ruders had reported that Robert Bosch was considering a bit for the company that they've been pushing, you know, that company's been pushing kind of outside its business. Did it make a bit for the company? What can you tell us about that?
Unfortunately, I can't tell you a whole lot more. When we stated already is that we just don't as a policy, we don't comment on rumors of market speculation. As you know, it's it's been one article out there which triggered a lot of noise. And you know, we also in the past were well rumors about open in the past, and there will be rumors about going forward, and we just
don't speculate on and comment on these ones. So unfortunately, I know you were pokeing this one, but I can't tell you a whole lot.
I have to poke a little bit more though, is it is it a rumor? I mean, is the company for sale at this point? And is that something that maybe you've been getting some pressure from investors.
No, so again, it is a rumor, and we can't comment and we won't comment on this specific rumor. You know, but we're public listed company, Carol, So now by definition, you know, very in a certain mayle companies for sale every morning at nine thirty stock market opens, right now. It's a good deal, you know, but.
There's sales and then there's sales. You know, you know how this goes.
You're you're joking about saying it's a good deal. But what in your opinion do you think investors are missing about the Whirlpool story right now? Down nineteen percent so far this year.
Yeah, you know, you know, Tim, I shouldn't be arrogant about the investor. The market is always right. So what I think the argument for what would to be made is, yes, of course we're still emphasis on still in a negative macrocycle, but that will turn at one point and built I eve a US housing market and that will not be just a you know, a short recovery. That will be
probably a multi year recovery of a housing market. There's literally not a single company better position to benefit from the upside where a key supplier of eight out of the top ten US builders, we're very strong without portfolio all the homes. So once we market recovers, I think we will be a disproportionate beneficiary from a market. And you know that's my definition of market is always right. But I would say that's the argument, particularly for a long term investor.
Hey, Mark, we also have to go on that though.
If the market's always right, your stock in a big way. In June, on this Reuters report that Bosh was considering, we're still.
She's still poking. She's poking.
So if the market's always right that they were excited about a deal, does it make sense to you, I.
Don't know, you know, yeah, I appreciate your relentness, but I can't and I won't tell you a whole lot more. Listen, you know there's there's always speculation element, but you might get in the stock and as you know, very very short trade and and and people who are kind of not long term investors right now. Again it's we had also these speculation rumors in the past, and again I expect them also in the future. And that's that's just
the nature of a public there's a company. But again there's no you won't get a whole lot more for me on these rumors.
Okay, Mark, Well, then on something really easy for you to answer us politics? I know, I know, please come back after all these questions. We love you, please, so look, no question front center and a lot of a lot of investors' minds and a lot of voters' minds. But just very briefly, does it matter to you you have a really complicated supply chain, you do some importing. Does it matter to you who's in the White House?
You know, you know obviously, as you can tell for my accent, I should be careful about giving advice on US politics. But I also I'm firmly believe as a company, we encourage our employees to form a political opinion and they should vote. But I'm not going to endorse any candidate left or right. It just but we strong encourage our people to form their opinion, get informed, and vote
period Now. Of course, with our strong US exposure also the manufacturing side, we're not only the last American appliance company, but we have by long shot the most jobs in the US un appliance manufacturer. Of course, we have a strong vested interest in having a competitive and fair level playing field as a US producer. So so topics like steel prices, etc. They matter for us. And we're not
asking for subsidy or disproportioned help. No, we just want to be fair and we want to be you know, we don't want to have our arm tied, but one arm time behind our back as we fight. We're ready to fight, but it needs to be fair and level. And that's of course, yes, that is a strong best interest which we have.
Well, you're always fair with us, and always we appreciate your time. Mark Bitzer be well, so appreciate it. Sharman Presidency of Whirlpool. Mark Bitz are joining us from Michigan Shares of warpool. They've been kicking around a little bit higher, a little bit lower in the aftermarket