"Our results for this quarter reflect significantly lower OSB pricing and decreased volume of shipments in all product lines compared to the same quarter last year," chief executive officer Rick Frost said. "Demand continues to be weak. Jobs, consumer confidence, inventory of vacant homes for sale and the overall state of the economy continue to have a downward pull on housing."
The Nashville, Tenn.-based company plunged to an operating loss from continuing operations of $32.9 million from a $23.6 million profit in the April-June 2010 quarter. This came even though operating costs and expenses declined 3.1% to $386 million.
The oriented strand board (OSB) segment plunged to an operating loss of $22.9 million from a $47.9 million profit a year as sales shrank 35.4% to $140.6 million. Production of OSB at all LP plants declined by 5.3% to 852 million square feet (3/8-inch basis).
In contrast, the siding segment continued to show a profit, albeit close to half what it had been--$11.3 million in the second quarter vs. $21.8 million in 2Q10--as sales slipped just 9.2% to $118.6 million and production declined 11.1% to 201 million square feet (3/8-inch basis) Sales decreased across all regions in the face of weakness in both new-home construction and remodeling, LP said.
Meanwhile, engineered wood products' operating loss lightened to $3.2 million from a $4.4 million loss last year, with segment sales giving up 4.1% to total $53.6 million. Production of engineered I-joists tumbled 23.8% to 16 million lineal feet, while the output of laminated veneer lumber dropped 8.4% to 1.727 thousand cubic feet. Higher sales prices were partially offset by higher raw material costs in this segment, which is heavily dependant on new housing construction.
"The U.S. economy remains in an unsettled state that requires companies to be extremely agile to respond to wide swings in demand," Frost said. "For housing, there is growing agreement that the timing and strength of the recovery will be determined by the change in the inventory of vacant homes for sale and household formations enabled by job recovery. I believe we will see an erratic recovery for the rest of 2011 and into next year."