Mohawk Earnings Fall but Beat Guidance

Calhoun, GA., April 17, 2008--Mohawk Industries, Inc. reported first quarter net earnings of $65 million and diluted earnings per share of $0.95, both 28 percent below last year, but ahead of the company’s earlier guidance.

Net sales for the quarter were $1.74 billion, a decrease of 6.7 percent from 2007.

The U.S. economy continues to slow and is being impacted by tightening credit, contracting residential home sales, declining consumer confidence, and increasing costs. The flooring industry is in a cyclical downturn and the residential remodeling category is one of the first to fall but leads the rebound when the economy improves.

Spending on commercial has remained positive though it is expected to slow. The U.S. credit problems have affected Europe with growth expected to be flat to modest overall and good in Eastern Europe and Russia.

"Our performance for the first quarter exceeded our guidance for the period in a very difficult environment,” said CEO Jeffrey S. Lorberbaum.

“All of our business segments have managed through cyclical downturns in the past and are focused on improving productivity and quality, reducing infrastructure costs, passing along increased costs, controlling working capital, and investing in products and assets to enhance our future.

"Our Mohawk segment has continued to slow with weak industry conditions resulting in sales declining 13.6 percent. Residential sales remain slow with new and existing home sales low and consumers postponing purchases.

Lorberbaum said carpet price increases should be completed by the second quarter.

Commercial sales were stronger than residential sales, Mohawk said, and carpet tile was particularly strong.

Dal-Tile sales in the first quarter fell 3.8 percent, again with commercial sales offsetting weaker residential sales.

Unilin sales were up 14.7 percent  in the first quarter.

Although seasonal improvements will benefit the second quarter, Mohawk said it expects the market to remain weak and costs to remain high.

Related Topics:Mohawk Industries, Daltile