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Announcement:

Moody's revises Whirlpool's outlook to positive; all ratings affirmed

Global Credit Research - 03 Mar 2011

New York, March 03, 2011 -- Moody's Investors Service changed Whirlpool Corporation's ("Whirlpool") rating outlook to positive from stable due to its expectation that Whirlpool's credit profile and earnings will continue to improve over the near to mid-term despite concerns over high raw material prices and the impact rising gas prices may have on consumer demand. At the same time, all ratings were affirmed including the Baa3 senior unsecured rating and the Prime-3 commercial paper rating.

"We believe Whirlpool's enhanced cost structure and improving demand trends in all of its regions should enable it to continue improving its profitability despite higher raw material costs," said Kevin Cassidy, Senior Credit Officer at Moody's Investors Service. Whirlpool recently announced a U.S. 8% to 10% price increase, effective April 1, 2011, to offset the higher costs. "We remain cautious about the consumer's willingness to pay higher prices, especially when gas prices are rising almost every day and oil is over $100 a barrel," Cassidy noted. However, even if Whirlpool is unable to garner all of its proposed price increases, Moody's believes that higher prices for the more expensive products will hold. This is because these are purchased by more affluent consumers.

The positive outlook reflects Moody's belief that the combination of the worldwide improvement in demand for appliances and Whirlpool's improved cost structure should result in further progress in returning profitability and credit metrics close to pre-recession levels over the next 12-18 months. The positive outlook is not predicated on Moody's belief that Whirlpool's recently announced price increase will be fully accepted by the consumer. Rather, Moody's believes that improving demand and Whirlpool's cost efficiency efforts should enable it to improve its profitability even if the prices increases are only partially absorbed by the consumer.

While unlikely at the current time, ratings could be downgraded if North America and European appliance demand decreased or operating performance otherwise weakened. Key credit metrics that could drive a downgrade would be debt/EBITDA sustained above 4 times, EBITA margins approaching 3%, or retained cash flow to net debt in the low double digits. A rapid deterioration in liquidity or adoption of a more aggressive financial policy could also trigger a downgrade.

If Whirlpool can improve its profitability and credit metrics to pre-recession levels or better in the face of higher raw material prices, concerns about higher gas prices and the continuing uncertainty in the housing market, its rating could be upgraded. Specifically, an upgrade would require debt/EBITDA approaching 2.5 times, EBITA margins close to 7%, and retained cash flow to net debt sustainable at 30% or higher (all metrics incorporating Moody's standard analytic adjustments).

RATING RATIONALE

Whirlpool's Baa3 rating reflects its significant scale with revenue over $18 billion, significant geographic diversification throughout the world and a very strong brand name and liquidity profile. The rating also reflects strong (and steadily improving) credit metrics over the last two years with EBITA margins of 6.7% and retained cash flow to net debt well over 35%. Despite higher raw material prices and gas, Moody's believes that credit metrics should remain flat or possibly improve in 2011 with debt to EBITDA remaining below 3 times and retained cash flow to debt staying around 35%. The ratings are constrained by the risks associated with high input and transportation costs including the recent increase in gas and the impact this may have on demand and profitability. The continued uncertainty in discretionary consumer spending for low and mid-tier consumers is also a risk as is the fragility of the U.S. housing market and high unemployment levels.

The following ratings were affirmed:

Senior Unsecured -- Baa3;

Senior Unsecured (Shelf) -- (P)Baa3 ;

Senior Subordinated (Shelf) -- (P)Ba1;

Commercial Paper -- Prime-3

Moody's subscribers can find further details in the Whirlpool Credit Opinion published on Moodys.com.

The last rating action was on April 29, 2009, where Moody's rated the $850 million note offering Baa3 with a negative outlook.

The principal methodology used in this rating was the Global Consumer Durables published in October 2010.

Based in Benton Harbor, MI, Whirlpool Corporation manufactures and markets a full line of major appliances and related products including laundry appliances, refrigerators and freezers, cooking appliances and other appliance products. The company markets products under several brands including Whirlpool, Maytag, KitchenAid and several others. The company reported net sales of approximately $18.4 billion for the year ended December 31, 2010.

REGULATORY DISCLOSURES

Information sources used to prepare the credit rating are the following: parties involved in the ratings, public information, and confidential and proprietary Moody's Investors Service information.

Moody's Investors Service considers the quality of information available on the issuer or obligation satisfactory for the purposes of maintaining a credit rating.

New York
Kevin Cassidy
VP - Senior Credit Officer
Corporate Finance Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

New York
Peter H. Abdill, CFA
MD - Corporate Finance
Corporate Finance Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Moody's Investors Service
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Moody's revises Whirlpool's outlook to positive; all ratings affirmed
No Related Data.
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