Marc Bitzer
Chairman of the Board and
Chief Executive Officer

A Letter to Shareholders

It is my pleasure to provide our 2024 Annual Report to you. I want to use this opportunity to extend our sincere appreciation and thanks for your ongoing support and trust in our company.”

On the following pages, you will see updates on our portfolio transformation, the progress on our strategic imperatives and a review of our financial performance. In summary, you will see progress in all three areas, while at the same time, we will continue to pursue opportunities that will improve our execution of these initiatives.

Portfolio Transformation

In last year’s letter, I described our portfolio transformation as a multi-year process with the objective to reduce our exposure in low-margin businesses and instead strengthen our footprint in higher-margin businesses with a regional focus on the Americas. 2024 marked a major milestone in this process with the divestiture of our European major appliance business. While Europe is a significant region for major appliances, it has not been a source of value creation for us over the past three decades, despite repeated efforts to restructure the business. The divestiture of our business into a newly formed company, Beko Europe B.V., in which we hold a 25% equity stake, reduces our exposure and allows us to participate in the upside of Beko and create value through ongoing brand royalties.

While a portfolio transformation is never really complete, we now have an exceptionally strong set of business units, all of which have a very strong position in their respective regions:

MDA North America — the #1 company in North America, which has a lot of future (housing-related) upside
MDA Latin America — the #1 company and leading brand portfolio in Latin America, which will benefit from further penetration growth
MDA Asia — the #3 position in India, which is the fastest growing country for appliance sales in the world
SDA Global — the #1 mixer brand in the world

Our portfolio transformation brought a stronger regional focus on the Americas, which now account for close to 90% of our revenue, and offer strong growth opportunities going forward.

Strategic Imperatives

Similar to last year, the progress with our strategic imperatives has continued and even accelerated, yet we are far from having completed the strategic transformation journey.

Our recently launched strategic imperative, Inspire Generations with Our Brands, showed several promising approaches to get even more leverage from our incredibly strong portfolio of brands.
Our product leadership score, as part of the Win with Product Leadership imperative, showed another year of improvement. We refocused on our premium products, faster time to market and structural product cost reductions.
Our new capabilities created through our Grow Our Consumer Direct imperative enabled a solid 10% year-over-year direct-to-consumer sales growth, with particularly strong progress in our Small Domestic Appliance Global business.
Finally, our Build a Competitive and Resilient Supply Chain imperative supported our goal of achieving approximately $300 million in cost take out.

Financial Performance and Capital Allocation

Overall, our 2024 financial performance was solid: three of our four business units achieved record (or near-record) results, and we demonstrated sequential margin improvement since the first quarter. Despite what continues to be a challenging macro environment, we ultimately delivered $887 million ongoing EBIT^(a) (5.3% of sales) and nearly $400 million of free cash flow^(a). However, we did not meet our own expectations and external commitments. This was largely driven by our MDA North America business where the full-year EBIT margin was 6.5%. The sluggish housing market, with a 30-year low of existing home sales, has largely contributed to these results. But we know we can do better — even in such a soft industry environment. Our capital allocation demonstrated a clear priority on dividend pay-out and debt reduction. While we had a small amount of share buybacks ($50 million), we returned approximately $400 million to shareholders in the form of dividends and paid down $500 million of long-term debt.

Looking to 2025, we continue to remain bullish on the growth prospects in our Latin America and Asia business, as well as our SDA business. We are also very optimistic about the mid- and long-term prospects of the U.S. housing market. The structural undersupply of the housing market, which is estimated to be around 3 to 4 million units, is expected to ultimately translate into a multi-year housing boom — and there is simply no home appliance company better positioned to benefit from this eventual recovery. At the same time, we are cautious about the pace of this recovery. It may take multiple interest rate reductions and mortgage rate stability to “unlock” this market. Absent this, we remain focused on the levers that are in our control, namely cost discipline and further progress in our price/mix realization.

Lastly, I want to thank all of our 44,000 employees around the world for relentlessly working to improve life at home for our millions of loyal consumers.

Sincerely,

Marc Bitzer
Chairman of the Board and Chief Executive Officer

MDA = Major Domestic Appliances; SDA = Small Domestic Appliances
^(a) The ongoing measures, including ongoing earnings before interest and taxes and ongoing earnings per diluted share, as well as free cash flow, are non-GAAP measures. Please see Financial Reconciliations for a reconciliation of these non-GAAP measures to their equivalent GAAP measures.