Mohawk Commercial, Rugs Outperform Hard Surface

Dalton, GA, July 23, 2008--In an environment of high energy and transportation costs and a slow housing market, Mohawk Industries CEO Jeffrey Lorberbaum said its commercial products and the rug business continue to outperform hard surfaces.

He noted in a conference call that the carpet business is at about 75 percent of capacity.

“Commercial and rug products are performing better, while the hard surface and cushion products are declining more than residential,” Lorberbaum said.

Many customers, he said, squeezed by the economy, are being forced to trade down in quality, which is hurting the company's margins.

“The middle part is the most affected, the higher end is affected less than that, and the lower end has no place to trade down to. Customers are trading down, and quality with it. We’re trying to make sure we have our products in right place and the right prices to satisfy the market as it goes.”

Lorberbaum said the company's major residential focus is on the replacement business through independent stores, home centers, and multi-family housing.

Mohawk has also announced two price increases totaling about 10 percent, which are being implemented in the second half of the year. He said the cost of raw materials has increased as much as 50 percent since the first of the year, with polypropelene leading the way.

Mohawk reported quarterly net earnings of $89 million and diluted earnings per share of $1.29, both 23 percent below last year. Net sales of $1.84 billion were down 7 percent from the year-ago period.