Release Date: February 07, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Whirlpool of India Ltd (BOM:500238, Financial) reported a 17% revenue growth from April to December compared to the previous year, indicating strong business momentum.
- The company achieved a gross margin improvement of 220 basis points year-over-year, reflecting successful cost management initiatives.
- Profit before tax (PBT) grew by 100% compared to the previous year, showcasing significant profitability improvements.
- Market share gains were reported in triple-digit basis points for both refrigerators and washers, which constitute 90% of the business.
- The company has made substantial progress in reducing working capital, moving from 5% of sales in September 2023 to minus 3% in September 2024, enhancing cash generation.
Negative Points
- Concerns were raised about high staff costs compared to peers, which could impact overall efficiency and margins.
- The anticipated sell-down of Whirlpool Corporation's stake in Whirlpool of India Ltd to 20% raised questions about long-term commitment and strategic direction.
- There is uncertainty regarding the timeline for achieving high single-digit EBITDA margins, as the company is currently at around 3.5% after adjustments.
- The company faces challenges from competitors aggressively trying to regain market share, particularly in the washers segment.
- Potential risks were noted regarding the increase in royalty fees as part of the long-term licensing and tech agreements with Whirlpool Corporation.
Q & A Highlights
Q: With the productivity improvements reflecting at the gross margin level, when do you expect these initiatives to impact below the gross margin, particularly concerning staff costs and other expenses?
A: Unidentified_3 (Managing Director): We are investing in areas that drive ROI within the year, which is reflected in market share gains and premiumization. As we gain more scale, these costs should start looking better for us.
Q: How does the sell-down of Whirlpool Corporation's stake to 20% affect the company's commitment to the Indian market?
A: Unidentified_5 (CFO of Whirlpool Corporation): The sell-down increases flexibility for Whirlpool of India to focus on growth initiatives. We will maintain a long-term brand and technology licensing agreement, ensuring continued support and commitment to the Indian market.
Q: What is the timeline for achieving high single-digit EBITDA margins, considering the current margin levels?
A: Unidentified_3 (Managing Director): We have set a long-term goal for high single-digit margins, which is a multi-year objective. Our focus is on driving profitable market share growth, and while I can't provide a specific timeline, we are progressing steadily towards that goal.
Q: How will Whirlpool of India utilize the surplus cash on its balance sheet post the proposed sell-down?
A: Unidentified_3 (Managing Director): We are exploring various options, including capacity augmentation, new product lines, and potential inorganic growth opportunities. Our focus is on strategic investments that will enhance shareholder value.
Q: With increased autonomy, how will Whirlpool of India address potential increases in royalty fees from Whirlpool Corporation?
A: Unidentified_3 (Managing Director): I cannot comment on potential changes in royalty fees as it is a decision for Whirlpool Corporation. Any changes will go through the proper governance framework and be reviewed by the board of directors.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
