Dalton, Ga.-based Shaw profits drop amid flat carpet sales

Rolls of carpet made by Shaw Industries line the warehouse of Carpets of Dalton.
Rolls of carpet made by Shaw Industries line the warehouse of Carpets of Dalton.

Higher material costs and flat carpet sales combined to pull the rug out from under Shaw Industries earnings last year.

The Dalton, Ga.-based carpet maker said its net income was down despite profit gains by others in the home improvement and building industry.

Among the building-product businesses owned by Warren Buffett's Berkshire Hathaway, only the Dalton, Ga.,-based Shaw Industries reported lower net income during 2014.

In Buffett's annual report released over the weekend, Berkshire Hathaway said Shaw revenues "were relatively unchanged from 2013, reflecting the impact of the closure of its rugs division in early 2014 and lower carpet sales, offset by higher sales of hard flooring products."

Overall, Berkshire Hathaway's building businesses, including Acme Building Brands, Benjamin Moore, Johns Manville and MiTek, as well as Shaw Industries, boosted pretax earnings by 6 percent to $896 million last year on $10.1 billion in sales, up 5 pecent from 2013.

"Each of our building-products businesses generated increased earnings in 2014 over 2013, with the exception of Shaw, whose earnings declined due to comparatively higher raw material costs," the company said in its report for 2014.

Berkshire Hathaway does not break out results or sales from individual businesses.

In a similar year-end report released last week by the biggest floorcovering company, Mohawk Industries said its carpet sales rose last year by only 2.5 percent of $2.99 billion.

But Mohawk increased its profit margins from carpet by 22.4 percent to $46.9 million.

"The increase in operating income was primarily attributable to higher operations productivity of approximately $52 million, improved efficiency in selling, general and administrative expenses of approximately $15 million, lower restructuring costs of approximately $12 million, partially offset by higher input costs of approximately $17 million, higher provision for legal reserves of approximately $10 million and the unfavorable net impact of price and product mix of approximately $9 million," Mohawk reported in its annual report.

The only other publicly traded carpet company, the Chattanooga-based Dixie Group, reported last month that it lost $1.4 million in 2014 despite an 18.1 percent gain in sales, through acquisitions and internal growth.

Dixie said it was taking $3.2 million in chargeoffs from the closing of its Carousel brand and other facility realignments.

"Carpet sales were flat last year, but most expect 2015 to be a better year from more home remodeling and more home starts," said Kemp Harr, publisher of Floor Focus magazine.

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