Housing Takes Toll On Louisiana-Pacific
For the three months ended December 31, the Nashville-based wood-products company reported a loss of $24.6 million, or 24 cents a share, a reversal from the prior year's profit of $85.2 million, or 80 cents a share.
Revenue dropped 41% to $369.6 million, as industry benchmarks tracking building activity fell to their lowest this decade.
"Weakened demand negatively affected volume and pricing in all of our product lines," said chief executive Rick Frost in a statement, adding that the largest impact has been the "dramatic decline" in pricing for oriented strand board. Known as OSB, it's the main source of sales for Louisiana-Pacific.
Analysts surveyed by Thomson Financial had been expecting a quarterly loss of 15 cents a share and revenue of $470.4 million, on average.
Deutsche Bank and Banc of America Securities analysts both called the results "weak" and cited the bigger-than-expected OSB downturn.
Louisiana-Pacific is North America's biggest supplier of OSB, followed by rival Weyerhaeuser Co., which is scheduled to report financial results on Friday.
In the fourth quarter, Louisiana-Pacific's OSB unit lost $54.5 million, as measured by operating income, compared to a $111.9 million profit a year ago.
Frost also said the first quarter "looks and feels a lot like last quarter, with lower building activity and depressed prices for our commodity products continuing."
But as inventories for new and existing homes up for sale fall, demand for building products besides OSB should improve, he said, adding: "OSB may take longer, as it faces the added challenge of new low-cost capacity entering the market."
Management plans to handle the downturn by improving market share, lowering costs and funding its capital investment program, Lousiana-Pacific said.