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February 15, 2007

Mohawk sales near $8 billion

By Jamie Jones

Calhoun-based Mohawk Industries in 2006 cracked the $7 billion mark in sales for the first time in the company’s history, almost reaching $8 billion. But a trend of declining carpet sales appears to be continuing into 2007.

The floorcovering manufacturer posted $7.9 billion in sales in 2006 — up from $6.62 billion in 2005 — and was buoyed by the purchase of laminate manufacturer Unilin, hard surface sales growth and price increases, but carpet sales remained relatively flat, declining in the fourth quarter.

Jeffrey S. Lorberbaum, Mohawk chairman and CEO, said the company’s performance was “good” in the fourth quarter (October to December) as the commercial market outpaced the slowing residential market.

“The U.S. flooring industry continued slowing,” Lorberbaum said of the fourth quarter financial results. “The residential new construction market and the retail remodeling channel have continued their decline. The commercial channel continues to outperform the residential channel.”

Dave Foster, a floorcovering observer and host of the radio talk show “Floor Daily” on WBLJ-1230 AM, said over the past 10 to 15 years carpet has slowly lost market share to hard surface products such as tile and wood. That’s why many floorcovering companies, including Mohawk and Dalton-based Shaw Industries, are now producing and distributing hard surface products, he said.

Mohawk’s 2006 fourth quarter net earnings of $129.5 million were 30 percent higher than for the same period in 2005 ($99.6 million). Net sales for the fourth quarter were $1.89 billion, a 5 percent increase from $1.8 billion in the fourth quarter of 2005.

Net sales for the Mohawk segment, which includes soft surface products such as carpet and rugs, was $4.74 billion in 2006, compared to $4.71 billion in 2005. In the fourth quarter, net sales for the Mohawk segment were $1.11 billion, compared to $1.19 billion for the same period in 2005.

Lorberbaum said he expects “slow U.S. industry sales in the first quarter of 2007 that will impact margins and earnings.”

Mohawk has more than 32,000 employees, including approximately 9,000 in Murray and Whitfield counties.

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