Whirlpool to leave SA and sell local assets to former executives
Former Whirlpool executives are part of a group of investors who will buy the local assets of the US-based appliance maker
The world’s largest home appliance maker, Whirlpool Corp, insists it is not leaving SA. Not in the true sense of the word, it seems.
This is despite the US multinational putting local assets up for sale.
Whirlpool, which is listed on the New York Stock Exchange and the Chicago Stock Exchange, was lauded last year when it announced a R100m investment in a new manufacturing line in KwaZulu-Natal, creating 100 jobs.
The company, which manufactures KIC brand refrigerators and freezers, was founded in 1911 and has been in SA since 1996.
Commenting on the investment, then trade & industry minister Rob Davies said the move affirmed Whirlpool’s commitment to SA. "I cannot overemphasise the importance of the white goods sector and its contribution to the SA economy in terms of growth, job creation, localisation and exports. All these elements are critically important to the Industrial Policy Action Plan which underpins economic growth," he said. The plan sets out the government’s actions and timeframes for the implementation of industrial policy.
When it announced the investment, Whirlpool reiterated its support for the government’s localisation programme, and it partnered with local manufacturers.
The company has been looking for a buyer of its local operations for a while now, though it says the move is not a vote of no confidence in SA.
"Whirlpool is not leaving SA. Whirlpool and KIC’s SA operations are being acquired by a new owner, comprising former Whirlpool SA executives and other investors," says regional MD Michele Caputo.
Caputo says the multinational has indicated publicly for more than 18 months that it would "refocus" on its European markets and that its Southern African operations were available for acquisition.
It has already closed its operations in Turkey, he says.
Speaking at the release of Whirlpool’s results for the second quarter last month, Whirlpool CEO Marc Bitzer said that following the restructuring, the company was counting on improved conditions in the European market.
"The reason why we’re confident is ultimately coming back to the actions which we took." By exiting SA and Turkey, the multinational has taken out significant fixed costs, Bitzer said.
The second-quarter results show Whirlpool recorded a charge of $35m for the write-down of its SA assets, as well as $33m of "foreign currency translation adjustments". Caputo could provide no further details on the transaction.
But he says the new owner of the local assets will continue to produce KIC in SA and will also distribute Whirlpool, KIC, Indesit and Ariston in SA and neighbouring countries.
"Whirlpool Corp will continue to provide technological and production expertise and assistance to the SA operation," he says.
Caputo would also not be drawn on who the new owners are, saying only that the former Whirlpool executives "are passionate about the brand, the region and making home appliances that help families".
The negotiations on the transaction have mostly been concluded "and the transaction will take effect as soon as we receive the necessary regulatory approvals", Caputo says. "We expect the transaction to be closed during [the third quarter] of 2019."
He says the final terms of the transaction — including its immediate and long-term financial implications for Whirlpool Corp — will be published once the transaction is concluded.
The new owner will take over existing employment and supplier contracts, he says. And the transaction will have no effect on service commitments or warranties.
The company’s investment in SA will also be unaffected. Caputo says the R100m was invested in a manufacturing line in the Isithebe Industrial Park near Mandeni, between Durban and Richards Bay. The KwaZulu-Natal government owns the park.
"Our investment is complete and is already bearing fruit, including the launch of several new product ranges and the optimisation of our production processes in SA."
Whirlpool plans to launch a number of new products in the region during the second half of 2019, Caputo says.