S&P Global Ratings downgraded Whirlpool Corporation (NYSE:WHR) deeper into junk territory on Thursday, cutting its long-term issuer credit rating to 'B' from 'BB-' following weaker-than-expected third-quarter earnings and a sharp reduction in full-year guidance. The credit agency assigned a negative outlook to the appliance manufacturer, warning that deteriorating operating performance, persistent inflation, and tariff headwinds have materially delayed its financial recovery through at least 2027.
The rating action underscores mounting operational strain as third-quarter net sales fell 8.8% and adjusted EBITDA dropped 55%, weighed down by persistent volume declines in North America and the bankruptcy of key Brazilian retail partner Casas Bahia. S&P now projects full-year 2026 revenue will decline 8% with adjusted EBITDA margins compressing 370 basis points, driving adjusted leverage to roughly 11x at year-end compared to its previous 6.5x estimate.
Persistent macroeconomic headwinds in the U.S. continue to stifle discretionary demand, as mortgage rates above 7% constrain home turnover, residential investment, and new appliance installations. Consequently, Whirlpool remains heavily tethered to the lower-margin replacement market, where budget-conscious consumers are increasingly opting to repair existing units or trade down to lower-priced alternatives.
While Whirlpool plans to counter volume pressure through multiple pricing actions and expects to capture $290 million in cost savings from manufacturing and logistics optimization in 2027, higher commodity costs and component tariffs will blunt those benefits. S&P forecasts adjusted leverage will improve to only 6.9x by the end of 2027—well above its prior 5.1x target—reinforced by a decision to defer equity treatment on $575 million of mandatory convertible preferred stock until 2028.
Competitive dynamics pose additional medium-term risks to Whirlpool's domestic market share as rivals such as AB Electrolux partner with China's Midea Group to manufacture refrigeration and laundry appliances across South Carolina and Mexico. This low-cost near-shoring push threatens Whirlpool's domestic pricing power at a time when the company has yet to realize tangible advantages from U.S. trade policies implemented in 2025, which have instead elevated component import costs.
Whirlpool's near-term liquidity remains adequate, backed by an estimated $2.2 billion year-end cash balance and $1.4 billion in available asset-based lending capacity to meet seasonal working capital and capital expenditure needs over the coming 12 months. However, credit analysts flagged looming refinancing risks beginning in 2028, when roughly $1.9 billion in senior unsecured notes mature through 2030 and may require rolling over at significantly higher interest rates if core operating metrics fail to rebound.
Original Article
Whirlpool downgraded to B by S&P as earnings slump pushes leverage to 11x
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