Mohawk Industries net sales remain flat in FY19

18 Feb '20
4 min read
Pic: Daltile/ Mohawk
Pic: Daltile/ Mohawk

Mohawk Industries, a global flooring leader, posted 1 per cent decrease in net sales to $2.4 billion in the fourth quarter (Q4) FY19 compared to same period of prior year. For the complete financial year that ended on December 31, 2019, net sales remained flat at $10 billion, compared to prior year. The net earnings in Q4 increased to $265 million.
Net sales of global ceramic decreased 1.5 per cent to $858 million compared to same period prior year. US ceramic business reportedly remained under pressure from LVT taking share and high industry inventories from ceramic purchases ahead of tariffs. To improve sales, Mohawk is rolling out multiple new products and adding sales representatives and design consultants in major markets. Company has begun manufacturing their proprietary new click tile in multiple sizes and designs and has reportedly received commitments from major customers.
For global ceramic segment in Mexico, the company continued to gain market share by expanding their brands, distribution and product offering with larger sizes, porcelain products and a more comprehensive wall tile collection. In Brazil, they had good sales growth in the period and initiated a new porcelain line to create larger sizes for premium collections. The southern European economies were reported to have remained slow, impacting Mohawk's primary ceramic markets and industry pricing. In Europe, the company increased volume and are expanding our activities in the commercial and outdoor channels. In Russia, company grew their sales in a soft market, and is starting up additional porcelain production to make super large sizes as well as a new plant to produce coordinated premium sanitary ware.
During the quarter, flooring North America segment's sales decreased 4 per cent to $936 million compared to same period prior year. Operating income for the segment declined primarily due to lower volume, price and mix. The company is leveraging their strengths in design and fibre technology to deliver differentiated new collections in both premium and value carpet categories. The virus in China is reportedly postponing the start-up of some production and could potentially disrupt some LVT service, depending on when product shipments resume.
For the quarter, flooring rest of the world segment's sales increased 3 per cent to $630 million compared to same period last year. The company is reportedly outperforming the European laminate market, and sales of our new Signature collection have ramped up quickly due to an enhanced level of sophistication. Mohawk announced the consolidation of wood manufacturing in Malaysia, which will improve their costs and increase flexibility to better satisfy the customers. LVT sales grew as the manufacturing productivity significantly improved. Company's new rigid collections are being well received and it's next generation of flexible LVT provides most realistic wood and stone visuals. Company's panels and insulation businesses had good results in a more competitive environment, as reported. In Australia and New Zealand, company's soft and hard surface sales grew in a difficult environment and it is launching many new carpet collections to enhance offering.
The company reported that the market conditions remain challenging across most of their businesses and geographies. In response, Mohawk is adjusting the business strategies, enhancing product offering and restructuring operations. It is increasing investments in sales and marketing, expanding the commercial participation and enhancing both the premium and value collections. To broaden their distribution into new channels and geographies, company is bringing many new product innovations and categories to market. Company's new LVT, countertop, sheet vinyl and carpet tile plants are improving productivity as they invest to expand customer base and sales volume. As company's LVT manufacturing capacity grows with higher speeds and efficiencies, Mohawk is enhancing design and features and increasing sales of our rigid and flexible offerings. Company is limiting the traditional inventory build that they typically do in the first quarter, as they manage the production with market demand. 
For the full year of 2020, Mohawk expects that their actions to increase sales and distribution, reduce costs and enhance utilisation of new plants will deliver improved year-over-year results, with the performance accelerating during the second half of the year.

Fibre2Fashion News Desk (JL)

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