Carpet and tile sales are slowing as interest rates rise, cutting sales and profits for the world’s biggest floor covering manufacturer.
Calhoun, Georgia-based Mohawk Industries Inc. reported Thursday that fourth-quarter sales were down 4% from a year earlier, cutting adjusted earnings per share by more than half from the same period a year earlier. Mohawk reported adjusted net earnings in the fourth quarter of $84 million, or $1.32 per share, excluding restructuring, acquisition and other charges. For the fourth quarter of 2021, Mohawk’s adjusted net earnings were $199 million, or $2.95 per share.
But the results were better than what analysts had forecast for Mohawk. The average estimate of six analysts surveyed by Zacks Investment Research was for earnings of $1.29 per share.
The flooring maker posted revenue of $2.65 billion in the period, falling short of Wall Street forecasts. Six analysts surveyed by Zacks expected $2.72 billion.
For the current quarter ending in March, Mohawk Industries expects its per-share earnings to range from $1.24 to $1.34. Analysts surveyed by Zacks had forecast adjusted earnings per share of $2.44.
For all of 2022, adjusted net earnings were $823 million, or $12.85 per share. In 2021, Mohawk reported adjusted earnings of nearly $1.03 billion, or $14.86 per share.
“After a strong beginning to 2022, the U.S. housing market declined under pressure from rising interest rates and high inflation,” Mohawk CEO Jeff Lorberbaum said in the company’s earnings report. “In Europe, energy and overall inflation escalated, and consumers reduced discretionary spending to pay for essentials. With lower home sales and residential remodeling in the second half of the year, our flooring volumes decreased. Throughout the year, commercial new construction and remodeling activity outperformed residential.
In its earnings report, Mohawk said the flooring industry “is slowing due to higher interest rates, sustained inflation and low consumer confidence.”
“We are adjusting our business for the current conditions by reducing production levels, inventory, cost structures and capital expenditures,” the company said. “In the first quarter of 2023, we anticipate more pressure on our pricing and mix due to low industry volumes.”
— Compiled by Dave Flessner
Staff Photo / Jeff Lorberbaum, the chairman and chief executive officer of Mohawk Industries, speaks during a flag raising event in 2019 at Mohawk Industries in Calhoun, Ga. Mohawk Industries Inc. reported Thursday that fourth-quarter sales were down 4% from a year earlier.