Wood-based panels producer Norbord Inc. (NBD.TO) 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.
Norbord concluded that high unemployment and restricted mortgage availability for first time home buyers in both the US and the UK will continue to constrain housing activity and related panel demand. High foreclosure rates in the US also remain a significant issue.
NBD closed Thursday's regular trading at C$15.19 per share on the Toronto Stock Exchange.
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