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Mohawk: Higher costs make a dent into earnings

11.05.2017 − 

Mohawk Industries ended the first quarter with a stable performance by its Flooring Rest of the World division, which had previously achieved stronger growth. Net revenues had been only 1% higher than the prior-year period at USD496.2m; at constant exchange rates, revenues would have jumped by 3%. Operating income dropped 4% to USD76.1m. The operating margin deteriorated to 15.3 %. Adjusted for items incurred in connection with acquisitions and restructuring, operating income dropped as much as 5%.

Mohawk mainly blamed this fall in earnings on higher costs for upstream products, which are to be offset in the coming months by mark-ups sought in most product areas. The Flooring Rest of the World division had achieved significant improvements in revenues and earnings for a long time up until the fourth quarter of 2016. This growth was primarily spurred by acquisitions in recent years. Revenues had climbed 31.7% to USD1.919bn in 2016, while operating income had leapt 63.8% to USD333.1m.

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