A more than doubling in profit for oriented strand board (OSB) and a tripling of profit for siding enabled Louisiana-Pacific Corp. (LP) to swing to a $23.6 million profit from continuing operations in the second quarter from a $29.2 million loss in the year-earlier period. Sales leaped 67% to $447.1 million. But the Nashville, Tenn.-based firm's earnings announcement issued today also suggested these good times won't continue.
OSB operations rebounded to an operating profit of $47.9 million from an $18.4 million loss in April through June 2009 as sales soared 122% to $216.9 million. Meanwhile, the siding group's profit climbed to $21.8 million from a year-earlier $6.5 million even though sales were up only 25.4% to $130.3 million. LP indicated that the OSB business might have contributed to this disparity between sales and profits, as one of the siding plants also produces commodity-level OSB, and its OSB sales are included in the siding results.
The engineered wood products business remained in the doldrums, posting a $4.4 million loss vs. an $8.6 million loss in 2009. Sales grew 55% to $55.7 million. And the operating profit for all other products jumped to $3.7 million from $600,000 as sales climbed 59.2% to $47.6 million.
"Our results for this quarter reflect the higher OSB pricing and increased volume of shipments in all product lines compared to the same quarter last year," chief executive officer Rick Frost said. "Unfortunately, demand began to taper significantly in the second half of May and this weakness continued into June. Jobs, consumer confidence, inventory of vacant homes for sale and the overall state of the economy have had a downward pull on housing.
"The U.S. economy remains in an unsettled state that requires companies to be extremely agile to respond to wide swings in demand," Frost added. "For housing, there is growing agreement that the timing and strength of the recovery will be determined by the size of the inventory of excess vacant homes and household formations enabled by job recovery. I believe we'll see an erratic path for the rest of 2010 and into next year."
LP's dedicated OSB plants produced 846 million square feet (3/8-inch basis) of product this quarter, up 28.2% from a year before, while the siding mills that do OSB held steady on their production at 54 million square feet. Production of wood based siding (3/8-inch basis) rose 42.1% to 226 million square feet. The ocompany's output of engineered I-joists rose roughly a third to 21 million lineal feet, while production of laminated veneer lumber (LVL) and laminated strand lumber (LSL) grew by 62.9% to 1.89 million cubic feet.