LP suspends dividend payments
In another sign of the pressure currently on building products companies, Louisiana-Pacific has announced it will suspend its $0.15 per share quarterly dividend pending improvement in the housing market.
The wood products producer most recently recorded an $81 million loss in the second quarter and a 16 percent drop in sales from the year-ago period.
The company took “significant curtailments in the quarter to match supply with orders,” said CEO Rick Frost in a prepared statement. “These shutdowns, coupled with significantly higher material costs, put downward pressure on our margins.”
LP is not alone in its decision — other major companies have suspended dividend payments as one way to help curb costs in the down market. Most recently, Wolseley, parent of plumbing distributor Ferguson and pro dealer Stock Building Supply, opted to suspend its dividend following trouble in the North American market.
Net income drops 28 percent at Simpson
Simpson Manufacturing, maker of Simpson Strong-Tie and Simpson Dura-Vent products, saw net income drop 28 percent in the second quarter to $20.38 million from $28.3 million in the year-ago period. Sales were down 5 percent to $219.33 million from $231.3 million last year.
In the second quarter of 2008, sales declined throughout the United States, with the exception of the northeastern and midwestern regions of the country. California and the western states had the largest decrease in sales, the company said in a statement.
Those declines were in part offset by strong sales in Canada and mainland Europe, which “increased significantly.” Sales declined in the United Kingdom.
In the company’s Strong-Tie division, sales fell 4.9 percent, while Dura-Vent sales fell 10.2 percent. The company noted that while sales of its Dura-Vent’s pellet vent and chimney products increased, sales of gas vent and Direct-Vent product lines decreased.
Simpson Manufacturing is based in Pleasanton, Calif.
Builders FirstSource posts $46 million loss
Builders FirstSource reported a net loss of $45.9 million for the second quarter, which ended on June 30, 2008, swinging from net income of $8.4 million for the second quarter of 2007. The Dallas-based pro dealer posted $307.3 million in sales for its second quarter, a 34 percent decline from $465.1 million during the same period last year.
For the first six months of 2008, Builders FirstSource reported sales of $577.7 million, versus $876.2 million last year. The company lost $61.7 million during the first two quarters of the year. Last year, Builders FirstSource posted a profit of $8.6 million for the same period.
Commenting on the financial results, CEO Floyd Sherman said that housing starts in his company’s markets — primarily the eastern and southeastern United States — fell 43.1 percent in the second quarter of 2008 compared to the previous year. Builders FirstSource was able to offset the declines, he said, by gaining an estimated 8.2 percent of market share.
The company’s liquidity is “strong at over $210 million,” according to CFO Charles Horn.
In a prepared statement, the company said it “expects the difficult market conditions to negatively affect operating results throughout the remainder of 2008 and 2009.”