Shaw Reports '08 Pre-Tax Earnings of $205 Million

Omaha, NE, March 2, 2009--Shaw Industries pre-tax earnings declined 53% or $231 million to $205 million in 2008, due to both lower sales volume and higher product costs.

Shaw revenues of $5.05 billion in 2008 declined $321 million (6%) compared to 2007.

Shaw said the revenue decrease was primarily due to a reduction in year-to-date residential carpet sales volume, partially offset by higher average selling prices and revenues from recent acquisitions.

The decrease in residential carpet volume in 2008 reflected the significant downturn in residential real estate activity that began in 2006 and was exacerbated by the credit crises during 2007 and 2008.

Increases in petrochemical based raw material costs along with reduced manufacturing efficiencies caused the product cost increase, Shaw said.

The gross margin rate for 2008 was approximately 3 percentage points lower compared to 2007.

Pre-tax earnings in 2008 also included $52 million of charges in the fourth quarter related to asset writedowns and plant closure costs.

To offset the impact of rising raw material and production costs, Shaw instituted multiple sales price increases in 2008 and closed certain manufacturing facilities.

Management expects residential real estate activity and, as a result, Shaw’s sales volume, to remain weak during 2009.

In 2007, carpet volume decreased 10% versus 2006 due to lower sales in residential markets, partially offset by a modest increase in commercial market volume.

In 2007, pre-tax earnings decreased $158 million (27%) compared to 2006.

Related Topics:Shaw Industries Group, Inc.