Mohawk Sees Higher Earnings on Lower Sales
Calhoun, GA, Nov. 4, 2010 -- Mohawk Industries reported third quarter net earnings of $51 million and earnings per share of $0.74, compared to net earnings of $34 million earnings per share of $0.50 a year ago.
Net sales were $1.3 billion, which was a decrease of 5.3% versus 2009 net sales of $1.38 billion, or a 3.8% decrease with a constant exchange rate.
For the first nine months, net earnings were $140 million and earning per share was $2.03. Last year the firm had a net loss for the first nine months of $25 million and loss per share of $0.37.
"Our earnings were in line with our expectations though the industry slowdown continued into the third quarter," said CEO Jeffrey S. Lorberbaum.
"All of our businesses were impacted by soft industry conditions during the quarter. In response, we reduced our operating costs, implemented product promotions to drive sales, introduced new products to satisfy market changes and continued our international expansion strategies in Mexico, China and Russia."
The company said it had sales decrease 6% but its margins benefited by price increases, product mix and productivity improvements.
Mohawk said it is seeing higher demand in its commercial business as the remodeling markets improve. Commercial carpet tile is growing faster and Mohawk said it is expanding its tile assortment with new styling and broader price points.
Dal-Tile sales were down 5%, Mohawk, said, due to continued softness in the ceramic markets and the impact of lost production at its Monterrey, Mexico facility due to hurricane damage.
Dal-tile introduced more new products primarily focused on the residential remodeling. Commercial ceramic sales appear to have reached a cyclical bottom, Mohawk said, and the health care, education and its institutional channels are outperforming.
Unilin sales fell 2%, but increased 6% using a constant exchange rate.
Business in Europe improved while conditions remained difficult in the U.S. markets, the company said.
"Conditions in the U.S. remain weak and we are stimulating demand with promotions," according to the company's earnings report.
"We are broadening our distribution with Home Centers and national accounts by providing fashionable products. In Russia we are expanding our laminate customer base to support the new flooring plant which should be operational in mid 2011. Sales of our insulation boards are rising and we are increasing production to satisfy demand. The plants are improving productivity and reducing indirect expenses."
Related Topics:Daltile, Mohawk Industries