Mohawk's FY '18 Revenue Up 5% w/ Acquisition, Earnings Off 11%
Calhoun, GA, February 8, 2019-Mohawk announced Q4 2018 net earnings of $229 million, compared to $240 million in Q4 2017, a decline of 4.6%. Net sales for Q4 2018 were $2.45 billion, up 3% in the quarter.
For fiscal year 2018, net earnings fell 11.3% YOY, and net sales rose 4.9% in the same period.
Flooring North America net sales fell 2.6% YOY for Q4 and rose .05% for the fiscal year.
Net sales for the global ceramic business rose 4.3% in Q4 2018 compared to the year prior and rose 4.2% YOY in 2018.
Flooring Rest of World sales rose 11.1% YOY for Q4 and 13.6% YOY in FY 2018.
Commenting on Mohawk Industries' fourth quarter performance, Jeffrey S. Lorberbaum, Chairman and CEO, stated, "The period was affected by significant inflation, slowing markets and LVT impacting sales of other products. Even as we executed price increases in many products, our businesses experienced greater pressures on pricing and mix. In the quarter, inflation continued to be a headwind across most of our categories, as higher cost materials flowed through our results. During the period, we decreased our manufacturing production to adapt to market demand. Our start-up costs for the quarter were higher than we projected, with LVT production improving slower than anticipated. Our new countertop and sheet vinyl plants initiated manufacturing, along with our Polish ceramic tile expansion."
Mohawk has now reached the $10 billion mark in revenue from a global perspective. "...we selectively invested approximately $1.5 billion to enhance our long-term performance, primarily in new product categories and geographies with green field projects and acquisitions, cost saving initiatives and buying back shares," says Lorberbaum. "We are managing through current conditions while enhancing the longer-term value of our business.”
Says industry analyst Stifel, “Mohawk is currently battling a lower sales outlook in many of its markets, yet still trying to bring up production of many new investments. While these investments will clearly help in time, start-up expenses are high and inflation continues to impact margins. We still believe there are many cost trends that will improve as we move through 2019 but the macro environments are clearly a question mark in the U.S. , Europe, and Australia to name a few markets. Earnings will remain pressured in Q1 and this lower guide will no doubt concern some investors. We are confident that Mohawk's costs and production efficiencies will improve beyond Q1 but are wary about the macro outlooks in many markets.”
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