Stifel Offers Analysis of Mohawk and Industry in 2017
St. Louis, MO, March 13, 2018-Stifel has released its analysis of Mohawk Industries, which includes the following analysis of the industry’s performance in 2017,
"If the industry grew 3% to 4% in total and LVT grew in excess of 20%, the majority of the industry’s growth occurred within the LVT category. Mohawk does not provide sales growth by product line but we suspect the company did not grow its LVT in a 20% plus range in 2017. Why? Quite simply, Mohawk has embarked on a strategy to manufacture as much LVT as it can internally and not just source. While we don’t have good data on imported LVT, we think some of Mohawk’s competitors were quite aggressive sourcing LVT and likely grew sales accordingly. In addition, Mohawk did admit that its LVT capacity expansion in the U.S. did lag somewhat its original expectations which presumably left the company with somewhat less to sell at least in terms of internally produced product. The LVT expansion is producing now at a much higher rate and it likely did not make sense for Mohawk to only temporarily ramp sourcing, knowing that internal capacity was coming on stream. If this is deemed a “loss of market share”, so be it. We think the company will be at a competitive advantage longer term with assets in Europe and the U.S. to make LVT. In particular, Mohawk now has the capability of making rigid core LVT products, which we don’t believe is true of any of the other domestic producers."
Of Mohawk, the analyst says, “Mohawk’s growth in the U.S. clearly slowed in 2017. Using the company’s mix of U.S. sales at 63% for 2017 implies U.S. only growth was 2.5% to 3%. While we don’t have and won’t have final official U.S. flooring sales for 2017 for months, we believe the industry posted growth in a 3% to 4% range with the builder channel leading the way and commercial somewhat lagging. In terms of flooring categories, we believe that the resilient/LVT product group grew dramatically although data is hard to come by since so much of the LVT category is imported. Nonetheless, we believe the LVT category grew at least 20% last year. The only other flooring category that likely saw growth in 2017 was ceramic, and it was likely in the 2% to 3% range. All other categories, which primarily include carpet, wood, laminate and stone were flat or negative."
The report, in its entirety, can be found here.
Related Topics:Mohawk Industries