Norbord Posts Narrower Loss In Q3

10/30/2009 9:02 AM ET

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(RTTNews) - Wood-based panels producer Norbord Inc. (NBD.TO: News ) Friday reported a narrower loss for the third quarter. However, the company's net sales declined 25% due to lower North American OSB pricing and shipment volumes. Norbord expects business environment to remain challenging for another 6 to 12 months.

Net loss for the quarter was US$7 million or US$0.16 per share, narrower than US$18 million or US$1.21 per share last year.

Norbord recorded positive earnings before interest, tax, depreciation, and amortization, or EBITDA, of US$10 million, compared to negative US$2 million in the preceding second quarter and negative US$9 million in the same period last year.

Commenting on the sequential improvement, Barrie Shineton, president and chief executive, said, "This better result reflected a seasonal increase in North American OSB prices and the benefits of our continued work to reduce operating costs and improve product mix."

The Toronto-based company's net sales for the quarter declined 25% to US$192 million from US$256 million in the comparable period, due to lower North American OSB pricing and shipment volumes.

Based on on geographic segments, net sales from North America declined to US$114 million from US$158 million in the previous year. Net sales from Europe were US$78 million, down from US$98 million in the prior year.

In North America, North Central OSB benchmark price peaked at US$191 and averaged US$178 in the quarter - US$23 lower than the same period last year. South East prices averaged US$157 in the quarter compared to US$158 a year ago.

During the quarter, Norbord's North American mills operated at about 65% of capacity, while the OSB industry in North America operated at 60% of capacity. Norbord's European mills operated at 75% of capacity in the quarter. North American per unit OSB cash production costs decreased 12% from last year, as lower input costs more than offset the impact of lower production volumes.

In the preceding second quarter, Norbord reported a narrower loss due to the absence of a one-time antitrust litigation settlement charge incurred in last year second quarter. The company posted second quarter net loss of US$18 million or US$0.04 per share, narrower than US$36 million or US$0.24 per share, on net sales of US$174 million.

For the first nine-month period, loss narrowed to US$47 million or US$1.10 per share from US$85 million or US$5.74 per share in the comparable period. Year-to-date, net sales plunged to US$522 million from US$752 million in the prior year.