Owens Corning's Building Materials group reported today a 50% increase in earnings before interest and taxes (EBIT) in the first quarter, jumping to $49 million from $30 million in the year-ago period, on an 16.9% sales gain to $919 million.
Within that group, earnings before interest and taxes (EBIT) from roofing increased nearly 8% to $83 million, while insulation's EBIT loss narrowed to $34 million from a $47 million loss in loss in 2011's opening three months.
Insulation's losses occurred even though sales rose 14.1% to $3317 million. At the same time, roofing sales increased 18.5% to $588 million.
High sales volumes drove roofing's success, Toledo, Ohio-based Owens Corning said in an SEC filing. "In addition, favorable mix contributed to the increase in net sales. The increase in sales volumes was the result of higher shingle demand supported by seasonal increases and carryover of 2011 storm demand. Selling prices remained relatively stable on a quarter-over-quarter basis."
As for the insulation business, Owens Corning said its higher sales volumes were partially offset by an "unfavorable mix" of product types. "Our experience shows that our residential insulation demand lags United States housing starts by approximately three months," it said. "Lagged U.S. housing starts were up about 25% on a quarter-over-quarter basis."
The numbers reflect Owens Corning sales worldwide; it didn't provide a breakdown just for its U.S. business.
Looking ahead, Owens Corning noted that the housing market's recovery remains uncertain. "In our roofing business, we expact the factors that have driven margin in recent years will continue to deliver profitability," it said. "Uncertainties that may impact our roofing margins include competitive pricing pressure and the cost and availability of new products, particularly ashalt.
"In our insulation business, we believe the geographic, product, and channel mix of our portfolio may continue to moderate the impact of sustained demand-driven weakness associated with U.S. new construction," it added. "Should the recovery of new construction be sooner and faster than anticipated, we are prepsed to respond to actual demand by bringing additional production capacity back online."