Mohawk Industries’s results show that the Coronavirus pandemic clearly impacted on Q1 results, with net sales dropping 6.4% to $2.3 billion (-3.5% on a constant currency and days basis) and net earnings down from $122 million to $111 million. The results, announced by Chairman and CEO Jeffrey S. Lorberbaum, recorded that in the first quarter of 2020, the Global Ceramic Segment (Daltile, American Olean, Eliane, Marazzi, Emilgroup, Ragno, Kerama Marazzi and Kai) saw a similar year-on-year decline in sales to that of the group as a whole (6% as reported and 2% on a constant currency and days basis). Each of the regions where Mohawk Industries’ ceramic production activities operate was affected by the virus at different points in the period.
“In each region, we are lowering our production with demand, reducing our cost structure”, said Lorberbaum. “Our U.S. ceramic business has a higher percentage of new residential and commercial sales, so demand has declined more slowly as those projects are still being completed. In Mexico, our first quarter sales were slightly better than last year, with our mix declining due to increased competition, higher inflation and investments to expand commercial distribution. Though the Mexican government shut down manufacturing in April, we continued to ship from inventory. In Brazil, our results were good, even though the virus negatively impacted the end of the period. Our European ceramic business was on plan until the outbreak stopped production, and shipments to customers have continued. In our Russian business, our volume was stronger than expected due to customers increasing their inventory levels, anticipating higher inflation. Much of Russia is now locked down, with many stores and construction sites closed.”
In 2019, Mohawk Industries posted net sales of $9,970.7 million (0.1% down on the $9,983.6 million of 2018). The decrease was primarily attributable to the unfavourable net impact from foreign exchange rates offset by a higher sales volume. During the year, the group invested approximately $545.5 million in capital projects.
The Global Ceramic Segment posted overall growth. Net sales increased by 2.2% to $3,631.1 million, 36% of the group total.
While the U.S. ceramic business remained under pressure from LVT (to which it responded by rolling out new products such as the new click tile), in Mexico the group continued to gain market share by expanding its porcelain products and larger sizes. Business also grew both in Europe and in Russia, where the group has started up additional porcelain production to make super large sizes, as well as the new plant to produce coordinated premium sanitaryware, which was inaugurated in Orel on 27 January 2020.
Sales likewise increased in Brazil, where work on Eliane’s new Unit III in Cocal do Sul was completed. Inaugurated on 12 February this year, coinciding with the company’s 60th anniversary, the new Industry 4.0 factory is equipped with cutting-edge technology and automation and will produce porcelain tiles in sizes up to 120x120 cm. In 2019 Eliane invested R$130 million, equivalent to about US $22.5 million.
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