Article published July 31, 2008
Fiberglass reinforces Owens Corning earnings in quarter
OC net rises to $31M, sales rise to $1.6B
By GARY T. PAKULSKI
BLADE BUSINESS WRITER
Strong overseas demand for fiberglass from makers of windmills, bridges, and other products helped insulate quarterly financial results at Owens Corning from turmoil in the housing market.
To help meet growing world demand for fiberglass, executives said they will double capacity at a Gous-Khrustalny, Russia, plant.
"I am pleased with our second-quarter performance," Mike Thaman, chairman and chief executive officer, said in a written statement.
Profit rose to $31 million, or 24 cents a share, in the three-month period ended June 30. That was up from $29 million, or 22 cents a share, at the same time last year. The average of five analyst estimates compiled by Bloomberg News Service was for earnings of 21 cents a share.
Quarterly sales grew to $1.6 billion from $1.3 billion in 2007 in a development largely attributed to the purchase late last year of fiberglass production operations of France's Saint-Gobain SA, a longtime rival. That move helped offset a continuing slump in sales of products supplied to home builders.
Executives now say the company will make at least $265 million before interest and taxes in 2008, compared with a previous forecast of $240 million.The firm's shares rose $2.14, or 9 percent, to $26.64 in trading on the New York Stock Exchange. Nearly 4.5 million shares, or three times usual volume, exchanged hands.
Sales of insulation fell 6 percent to $413 million during the second quarter from $441 million in the prior-year period. Pre-tax profit, excluding interest payments, plunged to $7 million from $42 million.
Faux stone took an even bigger hit, with sales slipping 21 percent to $69 million from $87 million. The unit booked a pre-tax loss, excluding interest, of $5 million, compared with a profit of $7 million in the second quarter of 2007.
Roofing and asphalt-product sales climbed 15 percent to $475 million in the period from $414 million in 2007 as a result of higher prices and more storm-related home repairs. "Weakness in the U.S. housing market will continue to affect demand for Owens Corning's residential insulation products throughout 2008," executives warned.
In contrast, fiberglass sales- mostly as a result of the acquisition- climbed 70 percent in the quarter to $660 million from $389 million. Pre-tax profit, excluding interest expenses, nearly tripled to $71 million from $26 million.
Work at the Russian plant, formerly part of Saint-Gobain, is to begin this year and be completed in 2009. Demand for fiberglass is growing more than 10 percent a year in the nation. The factory also supplies other nations in Europe and the Middle East.
In another development, officials said the company repurchased 1 million shares of its stock at an average price of $23.55 each during the second quarter. That leaves nearly 131 million shares outstanding.
Contact Gary Pakulski at:
gpakulski@theblade.com
or 419-724-6082.
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