Christopher Wellborn
President and Chief Operating Officer at Mohawk Industries
[Technical Issues] business in Europe remains under pressure as demand has declined due to ongoing inflation and higher interest rates. We maintained higher average selling prices than we anticipated, partially due to our new introductions. Our overall volumes were down in the quarter with all markets impacted by slowing residential remodeling.
As the market slows, competition is becoming more aggressive in all channels. We are increasing porcelain slab production to support continued sales growth through enhanced visuals and specialized textures. A drop in fourth quarter energy prices benefited our cost in this quarter and subsidies from the Italian government helped to offset the impact of energy inflation. We continue to focus on cost containment, including productivity projects and R&D initiatives.
Our other ceramic markets are slowing, and we are reducing our production to align with demand. Sales trends improved as we progress through the quarter, and we expect these markets will continue to improve. Our 2023 product launches with new sizes, unique visuals and polished finishes are being well accepted in the market.
The integration of our acquisitions is progressing and we are implementing specific sales, marketing and regional plans to improve the businesses. This year, we operating as a single business and enhance efficiencies.
In our Flooring Rest of World segment, our European business have been compressed as high energy prices and inflation impacted consumer budgets. In the first quarter, higher volumes reduced shutdowns, lower energy costs and production of an energy improved our business from the fourth quarter. The contraction in the housing market has reduced volume levels in our industry as consumers change spending priorities and customers' adjusted inventory levels.
We are increasing promotions to attract additional volume and expanding product options for more constrained consumer budgets. We have increased controls to manage our cost and reduce our inventories. We are reengineering our formulations and expanding our supply base to improve our competitive position. We are executing our restructuring actions to adapt to the current environment. As input costs decline, we anticipate greater competitive pressures in the market.
As consumers have deferred residential remodeling projects, our flooring category was most impacted during the quarter. Both laminate and LVT volumes were lower in the quarter, and we are controlling our cost and production levels in response. We have begun the conversion of our residential LVT from flexible to rigid and are preparing to restructure the operations. Our sheet vinyl increased in volume as consumers sought options to lower remodeling costs. We are improving the product offering at our new Eastern European sheet vinyl acquisition with updated styling as we enhance the facility's production efficiencies.
Our panels business has slowed with market inventory reductions in the channel. Our margins are hot than anticipated due to stronger pricing, lower input costs and benefits from our biomass energy plans. We are making progress on achieving our planned synergies of our French panels plant and our recent mezzanine flooring acquisition.
Our insulation category performed the best in this segment as energy efficiency become a greater priority. Government regulations around energy conservation continue to increase, and our polyurethane products provide the greatest heat-resistant properties. We have integrated our insulation acquisition in Ireland and the U.K., and our new facility is ramping up ahead of schedule.
In Australia and New Zealand, the economies are slowing and inflation and higher interest rates have affected the housing market. In the quarter, our results were impacted by lower volumes in both residential soft and hard surfaces. We're implementing additional price increases to offset inflation and selectively introducing promotions to drive sales. The commercial sector is outperforming residential and we are expanding our emphasis in specified projects. We are controlling costs and adjusting inventory levels to market demand.
Our Flooring North America segment has been challenged by significant inflation, higher interest rates and more restrictive lending, which have weakened the housing market and our industry. Many consumers are deferring home improvement investments or trading down due to budget constraints. As a result, our customers are more tightly managing their inventory levels.
The segment's earnings for the quarter were compressed due to lower volumes and absorption of peak material costs, which our pricing did not cover. We significantly reduced inventory as we align production with demand and benefited from lower energy and material costs. Our restructuring actions are on track and will lower our cost in our residential and commercial soft service categories.
As the market conditions evolve, we are adjusting our manufacturing and sales strategies and reducing inventory with market demand. To control cost, we are postponing capital projects and reducing discretionary spending. Our second quarter margin should expand as our input cost improved and plant utilization increases.
Our first quarter commercial sales remained solid with new construction and remodeling projects continuing in most channels. The Architectural Billing Index indicates limited softening in the planning of new commercial projects this year. We are providing exciting flooring options that are carbon neutral with superior features to deliver greater value for the desiring green alternatives.
Developed in partnership with disabled and disadvantaged artists, our new art lifting collections, fashionable designs are quickly gaining traction in the market. The commercial flooring accessories acquisition we completed last year has complemented our product offering and benefited our business.
Sales of residential soft services declined more than other categories as retailers reduced inventory due to weaker consumer discretionary spending in the slowing housing market. The multifamily business remains the strongest category in residential, and we are expanding our participation in this channel. Retailers have responded positively to our new product launches, including Everstrand Polyether collections at accessible price points and our proprietary SmartStrand silk collections that provide superior softness in design. The new merchandising systems for our new carpet collections are being well accepted by our customers.
In the quarter, we enhanced our LVT collections with higher value introductions, featuring our Web Protect and antimicrobial technologies. We're seeing a more competitive market as the industry slows and ocean freight costs decline. Imports from Asia are being interrupted as the U.S. requires proof of compliance with the Force Labor Protection Act. It is still too early to determine the disruption this legislation will create.
Sheet vinyl sales are outperforming as consumers seek more budget-oriented options. Our West Coast LVT plant is continuing to ramp up and our production will expand as we move through the year.
During the quarter, our laminate sales in retail expanded with its increased acceptance of a waterproof alternative. Volumes in other channels are declining as consumers deferred remodeling projects and our customers reduced their inventory levels. We expect our Redwood collections to continue taking share due to the realistic visual, superior scratch resistance and waterproof properties. Our signature technology advances the design and texture of our Redwood products so that they are indistinguishable from premium wood flooring, by offering greater value and durability. Our input costs are declining, which will help us recover the inflation that impacted our margins.
Now I'll return the call to Jeff for his closing remarks.
