Earnings before interest and taxes (EBIT) at Owens Corning plunged by 57% in the third quarter to $67 million from $156 million in the year-earlier period on a 20.8% drop in sales to $742 million, the company announced today. Roofing sales shrank, halving the profit volume, while the insulation group continued to operate at a loss.
Toledo, Ohio-based Owens Corning said roofing sales shrank 28% in the July-to-September period to $404 million, causing EBIT to drop nearly in half, to $91 million from a year-earlier $177 million. "Roofing continued to sustain margins above 20% in the quarter despite a significant market correction, the company noted, predicing that the higher roofing margins "will continue to drive profitability."
Meanwhile, net sales for insulation dropped 9.4% to $308 million, causing the segment's EBIT to deepen to a $16 million loss from the $9 million loss in 3Q09. Owens Corning said pricing rose in the quarter.
"Geographic, product, and channel mix of Owens Corning's insulation business may continue to moderate the impact of sustained demand-driven weakness associated with U.S. new construction," the company said. "The company is prepared to respond to increased demand by bringing additional production capacity back on-line if the recovery of new construction is sooner and faster than anticipated."
Sales of other building materials slipped to $34 million from $38 million, but the EBIT improved to a loss of $8 million in the third quarter from a $12 million loss.
After adding in the composites segment of the business, Owens Corning's company wide net earnings slumped to $58 million from $80 million on a 12% drop in consolidated net sales to $1.2 billion.
"Our building materials segment is experiencing challenging market conditions," Mike Thaman, chairman and chief executive officer, said in a statement. "Despite that, roofing and insulation continue to demonstrate that they are great businesses for our company."