Mohawk posts big quarterly gains
Brent Felgner -- Gifts & Dec, February 16, 2007
Calhoun, Ga. -- Shares of Mohawk Industries shot up more than 9% today as the carpet and home fashions producer said fourth-quarter profits soared by 30%, to $129.5 million from $99.6 million last year, well in excess of Wall Street expectations.Sales at the nation's third largest supplier of home textiles rose by 5.2%, to $1.9 billion from $1.8 billion during the same period a year ago.
Driving the surge in profits was a strong performance from Unilin, its European hard floorings business, acquired last year, which more than offset weakness in theU.S. carpet and home fashions business. The core Mohawk business saw operating profits fall 14.4%, to $112.3 million from $131.2 million last year; sales in the division fell 6.4%, to $1.1 billion from $1.2 billion last year.
Jeffrey Lorberbaum, Mohawk chairman and ceo, said "Even though the industry remains soft, our business results were good for the quarter. We benefited from strong growth in the Unilin business and business initiatives to reduce costs. Our overall strategy of offering a total flooring solution combined with an expanded geographical presence has positively influenced results. TheU.S.flooring industry continued slowing. The residential new construction market and the retail remodeling channel have continued their decline. The commercial channel continues to outperform the residential channel."
Looking ahead, Mohawk hoisted a yellow caution flag, saying it anticipated "continued slow U.S. industry sales in the first quarter of 2007 that will impact margins and earnings." As a hedge, Mohawk said it has "reduced manufacturing, administration and marketing expenses based on current industry conditions, and will continue to adjust as required."
First-quarter earnings were forecast at $1.01 to $1.10 per share, vs. $1.04 last year, a range that spans a drop of 2.8% to a possible gain of 5.8%.
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