Posted by: Tamer Atya | April 13, 2009

Huge loss for Mohawk

Floorcoverings maker Mohawk Industries, USA, recorded a net loss of almost $1.46 billion, or $21.32 per share, in 2008 after a massive non-cash impairment charge for goodwill and intangibles.

Full year sales were down by 10% to $6.8 billion but fell by 18% in the fourth quarter alone, compared to same period a year ago. Operating income for the year, excluding charges, was US$449 million; including charges the company reported an operating loss of more than $1.1 billion versus operating income of $750 million a year ago.

Jeffrey S. Lorberbaum, chairman and CEO commented, “We are in an unprecedented time with the U.S. and world economies under great stress. Our category is suffering from the same issues as the entire economy including increasing unemployment, falling consumer confidence, limited credit availability and declining business investment. In addition, the housing contraction has had a significant impact on the purchase of flooring for our residential channels.”

Fourth quarter sales from the company’s Mohawk [carpet] segment fell by 17%, with both the residential and commercial businesses down. The company permanently closed a number of manufacturing and distribution assets in the fourth quarter to align operations with present conditions.

Carpet price increases did not cover peak material increases which escalated higher and remained longer than Mohawk anticipated. As a result, the Mohawk segment is expected to have an operating loss in the first quarter due to a $60 million flow through of peak material costs passing through inventory. In the second quarter, however, the company anticipates that margins will be positively impacted as peak inventory costs abate and from a seasonal improvement in volumes.

Source: inteletex.com

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