Belt-tightening and improved profitability in its roofing division helped Owens Corning log a quarterly profit at a time when half of production lines in key businesses have been shut off in response to the global downturn.
Metro Toledo's third-largest corporation said yesterday that it made $33 million, or 26 cents a share, in the April-to-June period on sales of $1.2 billion, which were $350 million below totals from a year earlier.
Profits were 21 percent below the $42 million, or 32 cents a share, earned in the second quarter of 2008. Still, quarterly profits were nearly triple the 9 cents a share expected by analysts surveyed by Thomson Financial Network. They exceeded adjusted earnings of 49 cents a share - a barometer closely watched by Wall Street - by even more.
But the downtown Toledo company missed Wall Street forecasts of $1.3 billion in quarterly sales by $100 million.
And executives warned that the building materials - except roofing - and fiber-glass reinforcements segments likely will continue to struggle through the end of 2009 amid the global recession.
Still, Chief Executive Officer Mike Thaman lauded the second- quarter results.
"We have delivered strong financial performance and strengthened our balance sheet while responding to continued weakness in our ... markets," Mr. Thaman said.
"Owens Corning delivered an outstanding second quarter," he said in a conference call with analysts.
Investors responded by buying up OC shares. They rose $2.04, or 11 percent, to $21.28 in trading on the New York Stock Exchange yesterday. Trading was more than double the usual volume.
The biggest factor in the manufacturer's better-than-expected results was its roofing division, where the ratio of profits to sales rose to 34 percent as a result of cost-cutting, product improvements, lower raw material costs, and reduced competition that kept prices stable, executives said.
Those factors helped the company take in more money on the sale of fewer roofing shingles and related products.
The firm had losses in its insulation and fiber-glass reinforcements businesses. Reinforcements are tiny fragments of glass added to plastic to make a strong, lightweight material for use in products ranging from boat bodies to windmill blades.
In response to declining demand for those products, Owens Corning has reduced production capacity by half, executives said during the conference call.
Those moves will contribute to an expected $160 million in cost savings in 2009. Combined with postponed plant upgrades and delays in other major projects, the firm plans to spend $300 million less this year than in 2008.
"We are responding to the current environment to reset our cost structure across the company," Duncan Palmer, finance chief, told analysts.
Analyst Jim Barrett of C.L. King & Associates in Albany, N.Y., maintained his hold rating on Owens Corning shares, but said the firm likely will do better in 2009 than he expected. He raised his forecast to an adjusted $1.05 a share for the year from 73 cents.
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