Louisiana-Pacific Corp. (LP) announced Friday, Feb. 27, that its net loss from continuing operations for the fourth quarter of 2008 deepened more than six-fold from the year-earlier period to reach $339.4 million. As a result, LP's net loss from continuing operations for the year nearly quadrupled, falling to $569.1 million from 2007's $155.3 million.
Sales in the fourth quarter shrank 33% to $250.2 million, while net sales for the year slid 19% to $1.38 billion.
Of the $366.2 million operating loss for the fourth quarter, $273.5 million involved non-cash impairment charges related to goodwill, while another $22.6 million was for other operating charges and credits. The $339.4 million net loss in continuing operations compares with a $49.1 million loss in the fourth quarter of 2007.
By year-end 2008, the amount of cash and investments on hand had shriveled more than two-thirds to $215.1 million.
"The decline in home building and related activity experienced throughout the first nine months of the year accelerated during the fourth quarter of 2008, driven by the ongoing credit crisis and deteriorating global economic conditions," Rick Frost, LP's chief executive officer, said in a statement.
The OSB part of LP's business improved to an operating loss of $31.1 million from a $54 million loss in the year-earlier quarter. This came despite a 42% decline in net sales to $109 million; sales volumes dropped 48% while the sales price increased 6%, LP said. With the fourth quarter's developments, the OSB segment recorded an operating loss for the year of $155.2 million, better than its $194.7 million loss in 2007. Sales revenue shrank 25% to $621.5 million, as volumes sank 29% and prices rose 5%.
"In 2008, we continued to take a number of significant steps to reduce the losses in our OSB business through market curtailments and cost reductions," Frost explained.
In LP's siding business, the segment's operating loss in the fourth quarter deepened to $11.1 million from $4.3 million in the year earlier period. Sales shrank 17% to $76.1 million. Full-year operating earnings dwindled to $2.8 million from $33.6 million in 2007 on a 6% drop in net sales to $423.8 million. "While the sales decline in 2008 due to reduced building activity negatively affected earnings for Siding, results were further lowered due to additional costs associated with converting the production processes at LP's Roaring River plant to add the capability of manufacturing an improved, treated line of siding," LP's statement said.
The engineered wood products segment's losses widened in the fourth quarter to $11.9 million from $2.6 million, while for the year it swung to a loss of $40.2 million from $11 million in 2007. This came as sales shrank 37% in the fourth quarter to $45.3 million and were down 29% for the year to $331.6 million. "For both the fourth quarter and the full year results, the lower operating results were driven by lower volumes, softening prices and significant start-up costs associated with the mill that produces [laminated strand lumber]," LP said.
"As we had anticipated, 2008 proved to be a very challenging year for our businesses and we expect 2009 to also be difficult," Frost said. "Our goal this year is to position LP to emerge from the global economic crisis stronger than before. LP continues to execute a comprehensive set of plans to reduce our manufacturing costs, minimize capital expenditures, reduce headcount as appropriate, consolidate functional activities across businesses, reduce fixed costs, reduce layers of management, consolidate businesses, and a myriad of other actions to improve our costs, productivity and effectiveness in the future. ... [W]e are committed to maximizing the value of the $215 million in cash and investments at year-end. We are also actively considering other financing and refinancing transactions to improve our overall liquidity."