Earnings before interest and taxes (EBIT) at Owens Corning's building materials group jumped nearly 70% in the third quarter from the year earlier to reach $156 million despite a 14% fall in net sales to $937 million, the company reported today.
Roofing accounted for all the profit within the group, as its EBIT jumped 86.3% to $177 million even though sales fell 8.9% to $561 million. Volume was down 10%, largely because of new residential activity and comparatively fewer storms this year than last. But the price increases for roofing materials that took place in the fourth quarter of 2008 have held steady since then, and raw material prices for the quarter were lower than they were in July through September 2008.
Earnings from insulation swung to a $9 million loss from a break-even third quarter of 2008, as net sales shrank 17.5% to $340 million as a result of the weak housing market. "Lower sales volumes, including the impact of underutilization of production capacity, accounted for substantially all of the decrease in EBIT," the company said.
Company-wide, Toledo, Ohio-based Owens Corning recorded slightly higher adjusted net earnings--$78 million this quarter vs. $73 million a year ago--even though net sales fell to $1.3 billion from $1.6 billion. Aside from the stellar showing by the roofing business, the company's composites group returned to profitability.
"Demand in the company's building materials segment is expected to be affected through the remainder of 2009 by weakness in the U.S. housing industry," Owens Corning said. "Roofing performance is expected to more than offset weakness in Insulation for the remainder of the year."