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Mohawk finishes a strong year

Calhoun, Ga. - Price increases, productivity improvements and lower interest were all credited with contributing to Mohawk Industries' favorable fourth quarter and full year results.

The company's U.S. business Mohawk, which includes the soft-flooring division Mohawk Home, "improved our mix as our higher value products gained greater traction with consumers," said Jeffrey S. Lorberbaum, chairman and ceo.

He added that Mohawk's recent expansion into new international markets "has generated additional growth in Mexico, Russia and Australia."

But by product category, rug sales did not impress as much as carpets.

"Our rug sales improved from last quarter, though they remain below the prior year as lower product mix and retail sales continued to decrease our results," he said. "Our new premium carpets have improved our overall selling prices and margins, however sales levels were impacted by home center product transitions that we expect to be completed during the first quarter."

Total company fourth quarter net earnings, excluding restructuring charges, soared 40% to $70 million, with earnings per share of $1.01. Including the charges, net earnings came to $66 million, with an EPS of $0.95.

Sales in the quarter grew 4%, to $1.44 billion.

For the year, net earnings and EPS were $250
million and $3.61, respectively.

Excluding restructuring charges, net earnings jumped 29% to $262 million and EPS of $3.78.

Sales for the full year grew 3% to $5.79 billion.

Mohawk recently announced a carpet price increase of 4% to 6% to cover rising material costs, Lorberbaum said.

"By applying the innovative processes used to develop SmartStrand Silk, we introduced our Wear-Dated Embrace nylon collection in the fourth quarter," he continued. "This extends our leadership position in the ultra-soft premium category."

Looking ahead, Lorberbaum warned the company sees some inflation in raw materials.

"In the U.S., low mortgage rates, stabilizing home prices and improving employment should sustain the housing recovery," he added. "We believe that U.S. residential remodeling should see improvement in the future and that the European economic conditions are near a bottom."

Guidance for first quarter earnings is $0.77 to $0.86 per share, excluding any restructuring, acquisition costs and interest on the new bonds for Italian ceramic tile company Marazzi.


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