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Norbord posts Q1 loss on prices, construction drop
(In U.S. dollars unless noted)
OTTAWA, April 25 (Reuters) - Norbord Inc. (NBD.TO) said it swung to a first-quarter loss on Wednesday, as plunging prices for a key wood panel product in North America overshadowed its profitable push into Europe.
Norbord, which makes such products as oriented strand board used in construction, reported a loss of $16 million, or 11 cents per share. That compares to a year-earlier profit of $58 million, or 40 cents a share.
Revenue fell 29 percent to $261 million from $368 million.
Oriented strand board prices, a replacement for higher-cost plywood, dropped to their lowest level since 2001, Norbord said. That coincides with a decline in housing starts over the past year as well as the impact of tighter mortgage lending conditions due to higher default rates in the subprime segment of the U.S. mortgage market.
Difficult market conditions are seen persisting into next year, the company said. Norbord cited industry experts who forecast housing starts in the United States ranging from 1.5 to 1.6 million for the year, well below 1.8 million in 2006.
North American oriented strand board prices will "bounce along at the bottom" throughout 2007, Norbord forecast, while European panelboard prices will continue improving.
Oriented strand board prices will start to increase some time in 2008, the company said, as housing starts recover and the product takes more market share from plywood.
"Norbord produced and sold record North American oriented strand board volume during the first quarter," said Chief Executive Barrie Shineton in a statement. "This validates our sales strategy of focusing on the largest retailers, contractor yards and home builders who are growing their own market shares."
Norbord also manufactures particleboard, medium density fibreboard, hardwood plywood and related products.
Shares in Norbord closed at C$8.42 on the Toronto Stock Exchange on Tuesday, down 31 percent from a year-high touched last May.
($1=$1.12 Canadian)
