Mohawk Swings To Loss in '08 on Impairment Charges
Calhoun, GA, Feb. 23, 2009--Mohawk Industries said it lost $1.46 billion last year or $21.32 per share as the economy and slumping housing industry took their toll. The figures included special impairment charges of more than $1.5 billion. This compares with net income of $706.8 million and earnings of $10.32 a share in 2007.
For the fourth quarter, operating income was $61 million, but including charges there was an operating loss of $93 million.
Net sales for the year were $6.8 billion, a 10 percent decrease from 2007. Fourth quarter sales totaled $1.48 billion.
"We are in an unprecedented time with the U.S. and World economies under great stress," said CEO Jeffrey Lorberbaum.
"Our category is suffering from the same issues as the entire economy including increasing unemployment, falling consumer confidence, limited credit availability and declining business investment. In addition, the housing contraction has had a significant impact on the purchase of flooring for our residential channels.
"In this environment we are focused on cash flow and the balance sheet. Our balance sheet remains strong with over $850 million credit availability. All of our business units have a priority to maximize cash by reducing costs, improving working capital, limiting capital expenditures, and focusing on actions which positively impact sales and margins. All of our segments have taken aggressive steps and our capital structure and future cash flow will allow us to manage through the downturn."
The Mohawk segment sales declined 17% this quarter with both the residential and commercial businesses down. In the fourth quarter customer traffic in flooring retail stores dropped significantly and the commercial business declined as businesses reduced investments.
The company said that its polyester carpet products are improving their position in the market as consumers favor more value oriented options. It also completed the redesign and launch of its new wood product line.
Dal-Tile sales were down 12% in the quarter compared to 2007, reflecting a slower commercial environment along with a continued decline in residential.
The Unilin sales during the quarter were down 26%, as reported, or 20% on a constant exchange rate basis. All products in both Europe and the U.S. declined from the prior year as the contraction in the global economy became more severe.
The firm said sales volume will continue to decline in the first quarter. The effect of lower carpet materials will not be realized until the second quarter. It said the Dal-Tile and Unilin segments will continue to be impacted by the recession and lower consumer spending resulting in lower production volumes and a declining product mix.
Related Topics:Mohawk Industries, Daltile