Episode Transcript
[00:00:01] Speaker A: Tilecast news, features and analysis brought to you by diary Vitaladict.
[00:00:19] Speaker B: Hello, tile addicts, and welcome to this edition of Tilecast, which is news for the weekend of the 26 July 2024. Hello, Joe.
[00:00:28] Speaker C: Hi, everybody.
[00:00:29] Speaker B: This is going to be a short one, I think tends to wind down as we get into the summer months. So this will be the last one for a few weeks. We'll let you all rest in August and come back in September. But just for now, let's wind up what's been going on over the last week or so. I gather there's been financial results out.
[00:00:47] Speaker C: Okay. Yes. Well, we'll start with the biggest player on the global scene, Mohawk Industries, who've announced net sales for the second quarter of 2024 of $2.8 billion, down 5.1% on 2023, with net earnings for the same quarter of $157 million. This means that net sales for the first six months of 2024 were down 4.8% year on year at $5.5 billion, with net earnings for the same period standing at $181 million.
[00:01:16] Speaker B: And is that what was expected?
[00:01:18] Speaker C: Well, commenting on the results, chairman and CEO Geoff Lauderbaum 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. He went on to say that long term demand for Mohawks products is strong, but residential purchases across our geographies are weak.
[00:01:41] Speaker B: Can you remind us what Mohawk does?
[00:01:43] Speaker C: Okay, well, they're a huge flooring player who've been buying more and more ceramic tile brands as the years go on, most notably Marazzi. But they have been increasing with strategic purchases right around the globe. And they are the biggest player in terms of manufacturing of tiles now in the world.
[00:02:01] Speaker B: Right. So there's going to be some adjustment as they've been buying things up and sorting things out.
[00:02:07] Speaker C: I think that's right. And they're also going to be affected by the same adverse winds that are affecting the whole sector. For instance, in the second quarter of 2024, Mohawk's global ceramics segment reported a 3.4% decline in net sales. Lauderbound says that this is, that they're taking a lot of action to cope with this, saying we're implementing numerous cost reduction projects across the segment, including product re engineering, process improvements, and streamlining administrative functions.
[00:02:34] Speaker B: But the big, they're a big group, so they have money to throw at it.
[00:02:38] Speaker C: They do. They are throwing the money at legion printing, polishing and rectifying technologies, and they are a good bellwether I think.
[00:02:45] Speaker B: Marvelous. Okay, so mexican group, Lamosa, right.
[00:02:49] Speaker C: This is another of the global players. And they saw a partial recovery in market demand in the first quarter of 2024 year. On year lemos sales were down 2% against q one in 2023 to 8.13 billion mexican dollars, but were 4.9% up on Q 420 23. They're doing pretty well in the export market with export sales reaching 3.35 billion mexican dollars, up 1%. The mexican group have two core businesses, ceramic tiles and adhesives. The ceramic tile portion was the worst hit by the overall contraction in the south american construction sector, with the sector's revenues down 4% against quarter 120 23 to 5.8 billion mexican dollars of the mexican group's two core businesses, ceramic tiles and adhesives. Ceramic tiles was worst hit by the contraction in the construction sector with the segments revenues down 4% against Q 120 23 to 5.8 billion mexican dollars. The adhesive segment showed good resilience with a 3% increase in sales, 2.32 billion mexican dollars. During the quarter, Lamosa continued to invest, allocating 303 million mexican dollars to the upgrading of production facilities. And it's also continued to integrate Baldassarre, the spanish tar manufacturer it acquired in October 2023, into the overall portfolio. So another example of the increasing globalisation of the tar sector.
[00:04:11] Speaker B: Okay. And continuing on south american themes, then, I gather the Portobello group has got their first quarter results.
[00:04:18] Speaker C: Yes, that's right. Portobello, the brazilian ceramic giant who also now have a big plant in Tennessee and America. And they've started 2024 with pretty positive results. In Q one, revenues grew by 7.7% compared with Q 120 23 and exports were up 10.4%. The domestic market reported a 3.4% revenue growth and surpassing 1.74 billion real, which is quite beyond the national pace for the sector. But export revenues fell by 12.2% year on year to reach 450 million real. But they think they've turned the corner. In the fourth quarter of 2023, exports were up 22.9% year on year. The interesting thing about their figures is that 67% of sales were generated by large and excel format tiles, which just shows that, you know, investment pays right.
[00:05:11] Speaker B: Brilliant. Okay, there's a lot of numbers in there. I presume all of this is in a written version on the website.
[00:05:16] Speaker C: It will. It'll got to have everything, including figures about the new us plant, the opening of 16 new portobello shops and the net contributions of the different sectors to the group.
[00:05:27] Speaker B: Okay, well, moving on, to the also in the Americas, the flooring Sustainability summit that you were going to report back on?
[00:05:34] Speaker C: Yes, obviously you've mentioned this in passing. I think this is a really interesting initiative held in the USA. The Flooring Sustainability Summit addressed critical challenges and opportunities in advancing sustainable building, perhaps within the flooring sector. What I liked about it was it's co hosted by the Tile Council of North America, the National Stone Institute, National Wood Flooring association and North American Laminate Flooring association. So all the major stakeholders, and it seems to have worked because it drew an audience of 225 key professionals to Washington DC. They discussed both the sort of pressing issues and also sought to formulate actionable strategies to drive positive change across the supply chain. What seems to have emerged most strongly among the participants was the need to standardized terms and definitions relating to sustainability in flooring, particularly around embodied carbon. Despite significant market attention, their lax and agreed upon definition and accounting methods vary widely. So basically it's very hard to compare eggs with eggs. The summit concluded, therefore, that a clear standardized terminology and reporting practices are needed to improve communication and understanding across the industry.
[00:06:45] Speaker B: I think this is an issue across many industries, though, isn't it? Sustainability is just one of those words that has just been used as a blanket term for good.
[00:06:53] Speaker C: Yeah, and I think that's right. And Cheryl Durst, the CEO of the International Interior Design association, hit the nail firmly on the head when she said, if we are to solve the problems and challenges that face us as a culture, as organizations and as an industry, we have to have these larger conversations with one another.
[00:07:10] Speaker B: So any more green initiatives that have been coming out over the last week?
[00:07:15] Speaker C: Well, the first one was that this summit has proved so successful, announced a second one for the 16th and 17 July 2025, also in Washington DC. And the aim is to build on the sort of collaborative relationships that were all built up at the first one. But for me, the most interesting green story of the week was that Iris Jeremiah Group, one of the world's leaders in high end technical ceramic slabs, and Edison, next equipment supplier, have jointly announced the production of the world's first 4d technical ceramic slab using a blend of green hydrogen and national gas. Now, green hydrogen has been the silver bullet that's going to cope with the big sustainability problem of tiles. But so far we've seen precious little action of it. But this could be the first case. So Iris slabs, standard 3.2 meters, 1.6 wide, twelve mil thick, have been given the name 4D ceramics. Because this is a little play on words, the 3d nature of the material itself, and then an extra dimension, sustainability on top.
[00:08:16] Speaker B: Okay, I'm glad you explained that, because I was thinking I'd had a huge gap in my education then. I seem to remember only three dimensions.
[00:08:22] Speaker C: Yeah, it's a nice marketing conceit. The Slavs were produced at Iris's h two factory in Castellarano, which was only completed last year. And this factory is capable of running on 100% green hydrogen in the future.
[00:08:37] Speaker B: Right. So somebody actually actioning some sustainability initiatives, which is great.
[00:08:42] Speaker C: Well, I mean, the great thing about this, and as you know, I'm a big fan, fan of Federica Minozzi, the chief executive officer at Iris. And she said that the next phase will be, they will use this test phase to fine tune the production process, and that they're aimed to gradually increase the percentage of green hydrogen going into production up to 50%, using the same production systems that Edison next has already created. And she says, we hope that other companies will follow our path so we can work as a system and become a driver of change, both nationally and beyond.
[00:09:14] Speaker B: I mean, very technical and obviously probably beyond the knowledge needs of most tile retailers or.
[00:09:21] Speaker C: No, I think. I think that's true. But just look at the headlines. And that is, you know, somebody is actually now using hydrogen. It's not just a fantasy. And once somebody starts to do it, you generally find that the. These things evolve quite quickly, but it's not the only thing that's happening out there. I'm another. I mean, as you know, I'm a bit of a tile geek, but I, Scichare, who technology lab, who are one of the high end players in the italian tile production market, have come up with some, been doing a lot of research into new materials to enhance the tactile sensation of ceramic surfaces, the feel as well as the look. And it has launched something it's calling next experience surfaces, and it's billing them as the future of surface technology. Basically, this is using a special mix of micro grits, very fine, highly calibrated particle size, to achieve a textured and fully matte, non reflecting surface. So why is this important? Well, the finished ceramic surface is able to meet two requirements that are normally very difficult to reconcile in tiles and porcelain worktops. One being totally non reflective, the other being easy to clean and chemically resistant. Well, Sidere claiming that next experience services achieve these things, these things, side by side. And they're doing it using a ready to use mixture that's easy to prepare and apply, and that they're saying that the resultant surfaces are not only pleasant to touch, but achieve slip resistance values of r ten or r eleven. So they're suitable for indoor and outdoor tile floors. So, cool stuff.
[00:10:51] Speaker B: Well, we need some images of these sorts of things, don't we? Maybe even some video one day.
[00:10:56] Speaker C: I mean, this is probably really only going to make sense when you view it through a microscope. But yes, we will get some up on the site as soon as we can.
[00:11:03] Speaker B: Okay, so, I mean, that's. Italian equipment and technology seems to be at the forefront of what's been going on.
[00:11:08] Speaker C: Yeah. You know, it's not the first time I say this, but you know, there's one thing that the Italians are even better at than selling ceramic tiles. It's selling the equipment to make ceramic tiles. And in 2023, the italian ceramic machinery and equipment industry saw its sales revenue climb to a new record high of 2373 billion euro, which is continuing its trend of year on year growth. However, the growth has slowed down. It's up, just up plus 0.9% this year following years of growth of 39% and 14%. So it's a slowdown, but, you know, it's still impressive. Export sales were up 1.8%, but there was a decline domestically with sales down 1.2%. And where are all this kit going? Well, basically right around the globe. The European Union is still the largest market, but South America climbed into second place. Asia's in third place. So that's not. That's excluding China. So the third place, that's India, Indonesia, Vietnam, Thailand and Bangladesh. So it's very impressive. Once again, we're going to have a lot more information on the diary of a tile addict. Okay.
[00:12:12] Speaker B: And I gather Karajet, you. You were talking about surfaces of tiles. Daiga the couraget also has some other.
[00:12:19] Speaker C: Yeah, well, I mean, kerajet are one of the pioneers of inkjet printing back in 1998. And they've continued to innovate in the field of digital glazing and decoration of ceramic surfaces. The latest iteration of this k ten inkjets are a significant breakthrough in selective or full field digital glazing. The k ten piezoelectric printhead allow for a high discharge of up to 200 grams/m² of materials with a particle size of up to eight microns. And frankly, this is stunning compared with what previously was much like a more ink based printing. But they're doing this with 600 dpi resolution and 16 grey levels, among other decorative features. So it's big, significantly larger particle sizes, but still fantastic definition as that's a win win. What's more, these printers are compatible with all types of digitally jettable fluids, so solvent based and water based, and can also be used for glazes, glues and water repellent coating. So this is a very flexible technology. And it's one of these things where this is going to give tile designers a whole new toolkit to play with.
[00:13:21] Speaker B: So it might be a couple of years before we actually see any of this stuff on the market.
[00:13:25] Speaker C: Well, I think it will be, but you know that they're going to have been trialling it somewhere. There will be a pet tile manufacturer somewhere who will be probably at Chesai or definitely at Sevis Armour will have the results of this because it's just giving them such great creative freedom.
[00:13:40] Speaker B: And if that's you, let us know first, please. Okay. And slab store, what's that?
[00:13:46] Speaker C: Right? Yeah. No, when we talk about italian machinery, you often forget how much they have invested in creating automization of the storage procedures. And basically, when it comes to next generation porcelain slabs, gauge porcelain panels and worktops, storage is a huge issue. And so system ceramics, one of the real big players in this market, has launched something called Slab Store. It's designed to optimize the storage and management of large dimension ceramic surfaces. It's flexible, modular and energy efficient. What it allows is personalized selection and packaging of slabs. Very precise operation with a lifting capacity of up to 300. It grips the worktops with 15 suction caps to move them around the storage space. It allows very efficient inventory management and is really bang on for big distributors. The aim is to offer a cost effective way to respond rapidly to changing market needs, optimize operational efficiency and reduce overall costs. So once again, a lot of wins there. And as it's from system, they got huge customer base already. You can see this is going to get adopted pretty quickly. And it's, you know, a final piece in the worktop jigsaw.
[00:15:04] Speaker B: Okay, well, I think. Is that it? Is that winding up the news for the week?
[00:15:07] Speaker C: Yeah, that's a wrap until the first week in September. So have a good holiday, everyone, and see you on the other side.
[00:15:14] Speaker B: Don't forget to still send any new stories you do have. If anything particular breaks, we will obviously cover it in any case, whatever the month. So do send any news stories to Joe on.
[00:15:25] Speaker C: Yeah, if you send them to me. Tile ukol.com. that's tileukol.com. thanks, Dale.
[00:15:33] Speaker B: Okay, that's brilliant. We look forward to see you all in September. Cheers.
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