Mohawk declares revision of its guidance for earnings
31 Mar '06
3 min read
Flooring producer Mohawk Industries Inc announced a revision of its guidance for earnings per diluted share to an estimate of $1.03 to $1.05 for the first quarter of 2006. This revision is attributable to the Mohawk segment which had higher than expected LIFO accounting charges and lower than anticipated growth in sales and margins for the period.
The LIFO accounting charge for the segment is estimated to be $13 to $15 million this quarter, compared to $6 million for the prior year. Currently, our raw material and energy costs have moderated while the non-cash LIFO charges were the second highest in company history. In a stable cost environment, LIFO charges should diminish.
We anticipated a greater improvement in sales and margins as the quarter progressed than we achieved in the Mohawk segment with sales growth of approximately 5% in the period. The lower growth was primarily related to soft retail replacement business, our largest channel in the carpet category. With slower industry sales, we saw more pricing pressure on some opening price point products and a higher level of promotion activity.
Our Dal-Tile segment continues with strong growth in sales and operating profits. The ceramic plant expansion in Mexico is complete and operating well. The Oklahoma plant expansion is progressing as planned and investments in the startup will begin in the second quarter.
The Unilin laminate business is growing in both the U.S. and Europe. Our U.S. laminate facility is providing product to our customers and improving our service levels. Our distributors are reducing their inventories due to the shorter delivery times from this facility. Our U.S. laminate strategy is proceeding with a new U.S. management structure, the introduction of new products under the Mohawk brand and the training of the Mohawk sales force on the attributes of our new products. We should see the sales impact of these changes during the second half of this year.
marketing@alchempro.com
