Jul 7 2010
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.