The world’s biggest floorcovering manufacturer expects to roll out another year of higher profits with improved carpet and hardwood flooring sales and lower taxes in 2018.
Mohawk Industries, Inc. said today it boosted its adjusted first quarter earnings by 11 percent over a year ago and Mohawk CEO Jeff Lorberbaum said he expects profits in the current quarter will be up from 5 to 7 percent from last year.
In the first three months of 2018, Mohawk earned adjusted net income of $225 million, or $3.01 per share, on sales of $2.4 billion. In the same period a year ago, Mohawk earned $201 million, or $2.68 per share, on sales of $2.2 billion.
“Mohawk is benefiting from its diverse geographical footprint and product portfolio,” Lorberbaum said. “Our performance in the first quarter accentuated this strength as we realized significant growth in LVT (luxury vinyl tile) in our largest markets and sales and profits grew strongly in our ceramic business outside the U.S.”
Mohawk earnings are being squeezed this year by the higher startup costs of new facilities, the loss of income from expired patents and higher material and freight costs. But the company’s effective tax rate is falling from 26 percent to 21 percent and the company is both increasing sales and prices for many of its products.
“We are initiating selective pricing actions by product and region that, combined with improving mix and cost reductions, will offset expected inflation,” Lorberbaum said.
Mohawk said its global sales of ceramic files and flooring were up 12 percent ( 8 percent on a constant currency basis) and residential carpet sales also were up in the quarter.
“Around the globe, we are starting up a number of large investments that will significantly enhance our long-term results by expanding existing sales, adding product categories and entering new markets,” Lorberbaum said. “Many of these operations are currently initiating new production, including Mexican, Italian and Russian ceramic; U.S. and European premium laminate; U.S. and European LVT; Italian porcelain slabs; and European carpet tile. In addition, by the end of this year, we anticipate commencing production of quartz countertops in the U.S. and sheet vinyl in Russia, as well as expanding polyester carpet in the U.S.; ceramic tile in Poland; and laminate and ceramic wall tile in Russia.”
Mohawk said it expects to complete its purchase of Godfrey Hirst next month, adding the largest flooring producer in Australia and New Zealand to its global portfolio.