Mohawk Industries reports slight downturn in third quarter

Net sales fell by 1.7% in Q3 compared to the same period in 2023 and by 3.8% in the first nine months of the year. Investments in 2024 total $450 million.

Mohawk Industries, the world’s largest flooring multinational, posted net sales of US $2.72 billion in the third quarter of 2024 (period ending 28 September), marking a 1.7% decrease from the $2.77 billion of Q3 2023. In the same quarter, net earnings reached $162 million.

Net sales in the first nine months of 2024 totalled $8.2 billion, down 3.8% from $8.5 billion in the same period last year. Net earnings were $425 million compared to a net loss of $579 million in the previous year.

Commenting on the company’s third quarter results, Chairman and CEO Jeff Lorberbaum said that the Calhoun, Georgia-based group had “delivered a solid performance in soft market conditions, which reflects the positive impact of our sales initiatives, productivity and restructuring actions as well as lower input costs”.

Due to its increased earnings and management of working capital, Mohawk Industries generated free cash flow of $204 million in the quarter, for a total of $443 million in the year to date.

“This year, we are investing approximately $450 million in capital projects focused on growth, reducing costs and asset maintenance,” added Lorberbaum.

The Global Ceramic Segment

Some 39% of the group’s sales are generated by the Global Ceramic Segment, the world’s largest producer of ceramic tiles with facilities in the USA, Mexico, Brazil, Italy, Spain, Bulgaria, Poland and Russia and the brands American Olean, DalTile, Marazzi, Ragno, Emilgroup, Eliane, Elizabeth, Vitromex, Kai and Kerama Marazzi.

The segment posted net sales of $1,058 million in the third quarter (down 3.1% on Q3 2023) and an operating margin of 7.9%, bringing sales for the first nine months of the year to $3.2 billion (down 2.7% on 2023).

The Segment’s margins expanded due to increased productivity, while lower material and energy costs offset labour and freight inflation. Alongside cost containment initiatives, including product reformulations, process enhancements and improved administrative efficiencies, the segment focuses continuously on enhancing its mix through the adoption of new technologies.

Lorberbaum highlighted some of the key initiatives carried out in the various geographical areas where the segment is present:

“In the U.S., we increased our builder partnerships by providing a complete product offering and superior service. Our quartz countertops are outperforming other work surfaces, and we will start up our new production next year. In Europe, our volumes exceeded the prior year, and product mix from advanced technologies and expanded participation in the commercial channel partially offset pricing pressures.”

The group has also announced targeted price increases in Mexico, and volume in Brazil has begun to strengthen.

As previously reported, Mauro Vandini took over as President of the Global Ceramic segment on 15 September, while maintaining his role as CEO of the Marazzi Group and head of the European ceramic business of Mohawk Industries.

The forecast for the coming months

Throughout 2024, global conflicts, political uncertainty and inflation have been weighing on consumer confidence and discretionary spending around the world. The higher value renovation segment is continuing to contract and has been overtaken by the commercial building segment, which has also lost momentum in recent months. As short-term macroeconomic conditions remain unpredictable, the group does not anticipate an improvement in demand until 2025.

“Central banks are shifting from a restrictive policy to a more balanced approach to stimulate their economies, which should benefit our industry as consumer and business spending expands,” commented Lorberbaum. “We expect that recent interest rate cuts in the U.S., Europe and Latin America will strengthen housing markets and increase flooring sales next year.”