Sales Increase 2.5% for Mohawk’s Global Ceramic Segment in 2019 First Quarter
The Global Ceramic Segment is taking targeted action to respond to results, including capacity expansions in some regions and staffing reductions in others.
Mohawk Industries, Inc., parent company of Dal-Tile, Marazzi, Eliane, and others, recently announced 2019 first quarter net sales of $2.4 billion, up 1% in the quarter and 6% on a constant currency and days basis. For the first quarter of 2018, net sales were $2.4 billion.
“In the first quarter, we delivered results in-line with the high end of our expectations despite economies weakening in most regions and a stronger U.S. dollar, reducing our translated results,” said Jeffrey S. Lorberbaum, chairman and CEO. “While U.S. housing markets began softer and higher inputs increased costs, both are showing signs of improvement as we enter the second quarter. Around the world, uneven demand impacted volume, increasing pressure on both price and mix. We reduced our production rates to balance our inventories with our customers’ demand and manage our working capital. Results from our recent acquisitions in Australia, New Zealand and Brazil are on track, and we remain optimistic about our ability to improve their market positions and costs.
“Each of our businesses is taking specific actions to adapt to the present environment. We are introducing new products to differentiate our offering and enhance our margins, and we raised prices to offset higher energy and materials. We have replaced high-cost assets, consolidated inefficient operations, enhanced manufacturing processes and reduced our overhead expenses.”
For the 2019 first quarter, Global Ceramic Segment sales increased 2.5% as reported and 7% on a constant currency and days basis. In the U.S., the company implemented price increases across many categories to cover inflation and higher transportation costs. Mohawk reports that it is enhancing product value with unique features such as slip resistance, greater durability, and bacteria resistant technologies, while also testing a fast installation technology and pioneering a new porcelain roofing system.
The startup of a new quartz countertop plant is on schedule and will complement the sourced stone and quartz program. To reduce operational expenses, the company reports that it has enhanced body formulations while improving manufacturing efficiencies, maintenance costs, and freight strategies, as well as lowering administrative and selling expenses.
In Mexico, the company is reportedly growing by broadening its customer base, expanding its porcelain offering, and supporting stores that exclusively sell its brand. In addition, price increases were implemented to recover higher natural gas, electricity, and transportation costs.
In Brazil, price increases were recently implemented to offset the higher cost of natural gas, which the government regulates. The company also reports upgrading its mix with high-end porcelain and restarting an idled production line.
As weakening markets increased pressure in Europe, sales were reportedly driven by commercial, outdoor, and porcelain slab products, as well as higher styled mid-price offerings. Mohawk reports that it is realigning the production of its products in its European plants and reducing staffing to improve costs, distribution, and service.
In Russia, sales reportedly grew significantly, product mix improved, and prices are being increased to recover inflation. During the period, the company completed its porcelain floor and wall tile expansion to support further growth. In addition, construction has begun for additional slab production and the manufacturing of premium sanitaryware.
Additional details are available at https://mohawkind.com.