Louisiana-Pacific Corp. (LP) reported today its loss from continuing operations shrank to $22.5 million in the first quarter from $30.3 million a year thanks to a 44% rise in net sales to $296.6 million that in turn was powered by higher prices for oriented strand board (OSB) and more housing starts.
"2010 started out stronger than expected driven by improved OSB pricing as well as volume growth due to customers replenishing inventories," chief executive officer Rick Frost said in a news release. "All of our operating segments improved over first quarter 2009. We achieved about 80% improvement in OSB, 30% better results in EWP [engineered wood products], and a four-fold increase in operating results in siding.
"The market for building materials is better than we expected and this strength is continuing into the second quarter," Frost added. "It appears that the housing market is recovering, but I also feel that the various government stimulus programs, particularly the homebuyer tax credit, have given homebuilding an extra boost. I expect that we will still experience a bumpy recovery, as foreclosures are likely to rise and the unemployment outlook remains uncertain--both key factors in a housing recovery."
Results by segment for Nashville, Tenn.-based LP:
- The OSB operating loss shrank to $4.5 million from a year-earlier $24.2 million on a 62% climb in net sales to $117 million. The actual volume of OSB sold climbed 34%, while the price of the goods rose 26%. Production of OSB by joint venture operations or under sales arrangements and sold to LP jumped to 664 million square feet on a 3/8-inch basis, while OSB production at wood-based siding mills slipped to 49 million square feet from 50 million a year earlier.
- Operating profits for siding nearly quadrupled to $8.5 million in the first quarter from a year-earlier $2.1 million, as net sales rose 20% to $89.6 million. "The increase in sales and related profitability was primarily driven by the increased housing market along with the increase in commodity OSB pricing," LP said. Production rose about one-third to 204 million square feet (3/8-inch basis) from 161 million square feet.
- EWP's operating loss shrank to $6.6 million from $9.2 million on a 63% leap in net sales to $48.8 million. Production of laminated veneer lumber (LVL) jumped to 662,000 cubit feet from 441,000 a year before, while production of laminated strand lumber (LSL) jumped to 237,000 cubit feet from 176,000 cubit feet a year before. Sales "were driven by higher volumes due to customers purchasing products to meet demand as well as restock inventories which had been depleted in the prior year," LP said. "The margin improvement was attributable to reduced costs associated with the mill that produces LSL."