Owens Corning's roofing division posted a 29% increase in pretax profit in the first quarter over the year-earlier period, but its insulation operations remained mired in red ink, improving only to a $35 million loss from $39 million in 2009's first quarter, the company announced today.
Roofing sales rose 16% to $530 million, while insulation sales added just 2.8% from last year to reach $294 million. Owens Corning's announcement didn't break down its product sales geographically, but it did note that higher sales outside the United States accounted for virtually all the increase for insulation.
"The company expects strong momentum to continue in the roofing business, as actions taken to increase margins in 2008 and 2009 will drive profitability in 2010," the company said in a news release. "Owens Corning believes that margins in excess of 20% will be achieved in 2010. The company estimates that the insulation business will narrow its losses in 2010, despite continued U.S. residential construction market weakness."
The Toledo, Ohio-based company credited the rise in roofing sales to customers' resotcking of inventories as well as their extra buying in advance of a price increase. Selling prices in January through March actually were slightly below that in the first quarter of 2009, it said.
Owens Corning stressed the connection between insulation sales and new home construction when it noted that first-quarter housing starts in the United States trailed year-earlier totals. Residential insulation demand typically lags housing starts by three months, it said.
Company-wide, Owens Corning swung to a net profit of $48 million in the first quarter from a loss of $28 million a year before. Net sales climbed 18% to $1.3 billion.