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Worldwide Whirlpool: Appliance Maker Eyes Better Days In Europe, China

This article is more than 9 years old.

To paraphrase Warren Buffett, the time to buy is when it feels like everyone else is selling, a view Whirlpool chief Jeff Fettig can get behind.

The maker of washing machines, dishwashers and other household appliances reported strong third-quarter earnings Tuesday and recently closed a pair of deals that add to its reach in Europe and China, two regions where there are more than a few concerns about the pace of growth.

Fettig says the deals – $552 million for a 51% stake in Shanghai's Hefei Sanyo and about $1 billion for a 60% stake in Italy's Indesit – came at a fair price, but even he acknowledges that were economic prospects better in Europe and China the assets may have cost more, or not been for sale at all.

"We think we can create meaningful value in the present environment," Fettig told Forbes Tuesday, and do even better should economic growth pick up speed.

Whirlpool grew revenue 7% in North America in the third quarter, 3.2% in Latin America and 1.2% in Europe, Middle East and Africa, excluding currency impacts. In Asia, sales tumbled 22%.

The scattered sales growth shouldn't come as too much of a surprise given the current global picture. "There are really only two markets of size that have positive demand right now," says Fettig, pointing to the U.S. and India, which itself is only starting to rebound after two weak years.

Focusing only on areas that are currently doing well is short-sighted though, and Fettig stresses Whirlpool was able to make its moves in Europe and China – the Sanyo business makes the company's China presence more than five times bigger – without sacrificing on other capital needs like funding its existing business, paying down debt and deploying cash to shareholders through dividend increases and buybacks.

"We're in a sweet spot right now," he says. The nature of global growth is such that a truly global company is unlikely to be firing on all cylinders equally at any given time, and Whirlpool's broadening footprint means that if one region slows, the others will be large enough to pick up any slack.

The bid for growth abroad doesn't reflect doubts about Whirlpool's home market either. Fettig remains upbeat about the U.S. housing market, even as recent data points have signaled the rebound from the bottom is slowing.

"Our view is the housing market came down [from its peak] over seven years, and that it will take about seven years to recover," Fettig says. "We still see a consistent growth story for a number of years, and we'd rather see that than the fast up, fast down we saw last time."

Shares of Whirlpool, which jumped nearly 7% Tuesday, gave back some of that advance Wednesday morning, slipping less than 1%. In what has been a modestly positive year for the stock, Whirlpool held up well through the mid-October market turmoil, rebounding sharply in the back half of the month and climbing to its highest levels of 2014.

WHR data by YCharts