Global flooring manufacturer Mohawk Industries, Inc. has reported a decline in second quarter sales.
According to its latest trading update for Q2 2024, total sales fell 5.1% to $2.8bn from $3bn in 2023. Net earnings resulted at $192m, up from $101m.
As for its half year performance, sales were down 4.8% to $5.5bn from $5.8bn, while net earnings stood at $262m, up from $181m.
Commenting on the Company’s second quarter results, Chairman and CEO Jeff Lorberbaum stated: “Our second quarter results exceeded our expectations despite soft market conditions around the globe. The commercial channel continues to outperform residential, although some softness in the category is occurring.
“While the long-term demand for our products is strong, residential purchases across our geographies remain weak. During the quarter, the actions we have taken improved volumes in many product categories, though the gains were offset by consumers trading down and competitive pricing.
“Residential remodeling is under the greatest pressure as consumers continue to defer large discretionary purchases due to inflation and uncertainty about the future. In addition, flooring remodeling is significantly influenced by housing turnover rates, which remain suppressed due to elevated mortgage rates, higher home prices and the ‘locked-in effect’ on homeowners.
“To reduce costs and align our business with current conditions, we are initiating additional restructuring actions that will generate annualized savings of $100 million, of which $20-$25 million will be recognized this year. The cash cost of these actions is about $40 million, with a total cost of approximately $130 million. The execution timelines will vary by project, with some extending throughout 2025 and into 2026.
“Across the segments, we will idle less productive operations, consolidate regional warehouses and leverage technology to lower administrative costs. We will also retire less efficient equipment and simplify our product offering. Along with these actions, our teams are implementing many other measures to manage the current environment.
“We anticipate present conditions continuing in the third quarter with elevated interest rates, inflation and weak housing sales impacting our markets. In the current environment, we are executing plans to optimize our revenues and costs.
“Our restructuring initiatives will deliver significant savings and enhance our performance when our markets recover. We continue to benefit from lower energy and raw material costs, partially offset by labour and freight inflation.
“In the third quarter, we anticipate pricing pressures will continue given low industry volumes, constrained consumer spending on larger purchases and consumers trading down. As usual, European summer holidays will seasonally impact our sales and performance.”
