Mohawk 3Q Profit Up 49% But Sales Weaker Than Expected

   DOW JONES NEWSWIRES 
 

Mohawk Industries Inc.'s (MHK) third-quarter earnings jumped 49% on expense cuts as the floor-covering maker's revenue disappointed analysts' expectations.

Shares fell 2.5% at $58.81 after hours in response. Through the close, the stock had risen 27% so far this year.

Mohawk, which makes tiling, carpet and hardwood flooring for both homes and commercial locations, struggled with weaker demand as the housing market deflated and the recession postponed remodeling projects. To cope, it increased prices on carpet, cut costs and extended its international reach, moves that revived the bottom line though sales have yet to truly rebound.

Chairman and Chief Executive Jeffrey S. Lorberbaum said Thursday that the industry slowdown continued in the latest quarter. Previously, Lorberbaum predicted remodeling in homes would expand in the second half and declines in commercial markets would bottom sometime before the end of the year.

To counter the ongoing weakness, Mohawk has reduced operating costs, spurred sales with product promotions and launches, and continued international expansion in Mexico, China and Russia.

In the most recent period, Mohawk posted a profit of $51.1 million, or 74 cents a share, up from $34.3 million, or 50 cents a share, a year earlier, which included 14 cents of charges. In August, the company predicted earnings between 70 cents and 79 cents excluding items.

Revenue decreased 5.3% to $1.31 billion. Analysts surveyed by Thomson Reuters most recently expected $1.4 billion.

Gross margin fell to 26.3% from 26.7%.

-By Joan E. Solsman, Dow Jones Newswires; 212-416-2291; [e-mail]