Mohawk profit up smartly in 2Q
HTT Staff -- Home Textiles Today, 8/3/2012 12:02:32 PM
Calhoun, Ga. - Mohawk Industries' second quarter results were lifted by better selling prices offsetting raw material inflation, along with productivity gains, product mix improvements and lower interest costs.
However, area rug sales have been challenging, the company noted during its conference call this morning.
The soft and hard flooring company reported net earnings jumped 19.7% to $73 million, or $1.06 per share compared to last year's second quarter. Excluding restructuring charges, net earnings were $79 million.
Sales for the period, ended June 30, were up 2% on a constant exchange rate to $1.5 billion, but otherwise flat to last year.
Year to date, net earnings climbed 35.7% to $114 million, or $1.64 per share compared to the year-ago period. Sales for the six months rose 2% to $2.9 billion.
Commenting on the company's performance, chairman and ceo Jeffrey Lorberbaum said commercial sales continue to outpace residential sales.
The company's Mohawk segment, which includes the Mohawk Home rug division, saw its adjusted operating income margin increase in the quarter by 110 basis points over 2011, "with gains from pricing, improved product mix and lower costs from productivity offsetting lower volume and higher material costs." Segment sales were down 3% during the second quarter.
"Our rug sales continued to be soft due to lower retail sales, as well as retailers deferring promotional activities and further reducing inventory within the channel," said Lorberbaum.
Looking ahead to the rest of 2012, Mohawk is seeing its U.S. order rates showing some improvement early in the third quarter, he said.
"In the U.S., low mortgage rates and higher housing starts should support future flooring sales," Lorberbaum summed. "And in Europe, we will have the normal seasonal slowing and expect the present trends to continue with exchange rates being a headwind."
Based on these factors, Mohawk's guidance for third quarter earnings is 96 cents to $1.05 per share, excluding any restructuring costs.
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