Mohawk Announces JV With Leading Chinese Tile Producer - Sanfi
CALHOUN, Ga., July 6 /PRNewswire-FirstCall/ -- Mohawk Industries, Inc. (NYSE: MHK) announces today the expansion of its international presence with an investment of a minority interest in Sanfi Ceramics. Sanfi is a leading manufacturer of ceramic tile in China and this joint venture provides the foundation for Mohawk's participation in the largest ceramic tile market in the world. Mohawk has opportunities to increase its equity investment in Sanfi in the future.
Ceramic tile is estimated to make up 70% or more of all flooring sold in China and is 25 times larger in units than the U.S. ceramic tile market with anticipated growth of 10% or more per year. Presently, the top 10 manufacturers in China only comprise about 10% of the market creating significant opportunity for expansion. This year, Sanfi has increased sales revenues about 50% from the prior year by continuing its focus on the local market.
Sanfi began manufacturing ceramic tile in 2003 and, with its strong management team, has quickly grown to one of the top 10 participants in the Chinese industry. It presently specializes in mid to high end polished floor and glazed wall tile segments using product innovation and multiple brands to maximize its market position. The company has a reputation for superior quality and value supported by two large, efficient manufacturing facilities. Sanfi's original manufacturing site is in Foshan supplying the national market and a new facility is starting up this year in Inner Mongolia focusing on Northern China. This fall, new equipment will be installed allowing Sanfi's participation in glazed floor tile which is the fastest growing segment of the Chinese tile industry.
"This new business venture clearly reinforces our continued commitment to being a global manufacturer in the flooring industry. We are excited to partner with a world class company such as Sanfi," said Jeffrey Lorberbaum, Mohawk Industries Chairman and CEO."Our joining forces with Mohawk gives us access to the latest technology and a partner with a history of excellence in selling and distribution. We are eager to leverage our combined strength and expand our market presence," said Mr. Chen Xiongzai, Chairman and CEO Sanfi. Together, Sanfi and Mohawk have extensive opportunities to increase market share in China by broadening product offerings, providing leading style and innovation, improving efficiencies, marketing and distribution capabilities. In 2010, Mohawk expects its investment to be slightly accretive excluding one-time accounting charges. Mohawk is a leading supplier of flooring for both residential and commercial applications. Mohawk offers a complete selection of carpet, ceramic tile, laminate, wood, stone, vinyl, and rugs. These products are marketed under the premier brands in the industry, which include Mohawk, Karastan, Ralph Lauren, Lees, Bigelow, Dal-Tile, American Olean, Unilin and Quick Step. Mohawk's unique merchandising and marketing systems assist its customers in creating the consumer's dream. Mohawk provides a premium level of service with its own trucking fleet and over 250 local distribution locations. Certain of the statements in the immediately preceding paragraphs, particularly those anticipating future performance, business prospects, growth and operating strategies and similar matters and those that include the words "could," "should," "believes," "anticipates," "expects," and "estimates," or similar expressions constitute "forward-looking statements." For those statements, Mohawk claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform act of 1995. There can be no assurance that the forward-looking statements will be accurate because they are based on many assumptions, which involve risks and uncertainties. The following important factors could cause future results to differ: changes in economic or industry conditions, including those in China; changes in foreign exchange rates; competition; raw materials and energy costs; timing and level of capital expenditures and implementation of operational improvements; integration of acquisitions; rationalization of operations; claims; litigation and other risks identified in Mohawk's SEC reports and public announcements. SOURCE Mohawk Industries, Inc.
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