Mohawk Reports Loss on Charges, Sees Better '09

Calhoun, GA, Nov. 4, 2008--Mohawk Industries reported a third-quarter  loss of $20.37 per share as the faltering economy has pinched consumers and higher raw materials costs affected margins.

However, excluding several special charges and impairments, Mohawk would have made a profit of $76 million or $1.10 per share. That's off 38% from the year-earlier period's net income of $122 million, or $1.78 a share.

Net sales fell 9% to $1.763 billion.

Analysts had expected a $1.12-per-share profit in the latest quarter.

CEO Jeffrey Lorberbaum said that consumers are reducing discretionary expenditures.

"Residential home sales and remodeling are at low levels and commercial projects are being impacted by tightening credit and softening business conditions. The European economy has become significantly weaker and affected both our flooring and non-flooring products."

The Mohawk segment was impacted most by the down turn. Sales declined by 11% with both costs and revenues under pressure. Almost every channel and product category slowed during the quarter.

Dal-Tile sales declined in the quarter 5% below the prior year with business deteriorating through the quarter.

"We believe Dal-Tile is performing much better than the overall ceramic market," the company said. "We are increasing our product offerings to the hospitality, multifamily and other commercial segments."

The Unilin sales declined 5% as reported or 11% on a constant exchange rate basis. Mohawk said the Western European market has softened substantially as the global economy declines. Laminate sales were down in both U.S. and Europe with Eastern Europe and Russia out performing other areas.

Mohawk said conditions will remain difficult in the fourth quarter and "We do not expect to benefit significantly from declining oil and energy until the first half of 2009."

The company said its financial results should improve next year over the second half of 2008 as higher selling prices and lower costs should help improve margins. It also anticipates that government stimulus and lower gas prices will provide a boost to consumers.

Related Topics:Mohawk Industries, Daltile