LP swings to loss
Louisiana-Pacific Corp., the Nashville, Tenn., wood products producer, reported sales of $362.4 million for its second fiscal quarter, a 19% drop from sales of $447.5 million during the same quarter last year. Net loss from continuing operations for the quarter, which ended June 30, was $33 million, compared with a net gain of $23.6 million a year ago.
"Our results for this quarter reflect significantly lower OSB pricing and decreased volume of shipments in all product lines compared with the same quarter last year," said Rick Frost, the company’s CEO. "Demand continues to be weak. Jobs, consumer confidence, inventory of vacant homes for sale and the overall state of the economy continue to have a downward pull on housing."
Looking forward, Frost forecast an “unsettled state” for the U.S. economy, one that will require companies “to be extremely agile to respond to wide swings in demand. For housing, there is growing agreement that the timing and strength of the recovery will be determined by the change in the inventory of vacant homes for sale and household formations enabled by job recovery. I believe we will see an erratic recovery for the rest of 2011 and into next year," Frost concluded.
Pulte reports $55 million loss
Pulte Group, one of the nation’s largest home builders, reported a net loss of $55 million for its second fiscal quarter, which ended on June 30. This compares with a net income of $76 million in the same quarter a year ago.
Pulte’s second-quarter results included $41 million of land, mortgage, organizational restructuring and debt repurchase charges. Prior-year results included $48 million of the same costs, offset by a net benefit from income taxes of $82 million.
Revenue from home sales in the second quarter decreased 29% from the prior year to $900 million. Lower revenue for the period was driven by a 28% decrease in closings, combined with a 1% decrease in average selling price to $248,000. Prior-year results benefited from increased demand stimulated by a first-time homebuyer tax credit, which expired April 30, 2010.
Net new-home orders for the second quarter were 4,222, which was consistent with the prior year and down 3% compared with the first quarter of 2011. Pulte’s quarter-end backlog was up 2% to 5,777 homes with a value of $1.6 billion, compared with a prior-year backlog of 5,644 homes with a value of $1.6 billion.
"The 2011 U.S. housing market continues to operate within the range of expectations we projected at the beginning of the year," said Richard Dugas Jr., Pulte’s chairman, president and CEO. "It is a positive sign that buyer demand appears to have stabilized following expiration of the home buyer tax credit last spring, but residential construction volumes are at historically low levels, and market conditions remain highly competitive. In this operating environment, we are focused on reducing our construction and overhead costs and enhancing our product offerings.”
Demand from China lifts Plum Creek
In its second quarter, timber company Plum Creek’s shipments of Oregon sawlogs to China went up 7%, compared with the first quarter. China now accounts for 27% of such logs, and Plum Creek CEO Rick Holley sees this relationship as a new status quo.
"While we expect that Chinese demand will exhibit some volatility from time to time, we believe their presence in the North American market is a lasting one that adds a relevant source of demand to West Coast log and lumber markets," Holley told investors.
He added that the combination of offshore demand and reductions in future Canadian supply are going to have a big impact on the trade balance, "which is positive for Plum Creek."
Back here in the United States, Holley described demand rising slowly, despite a housing recovery that has been "much more anemic than anyone anticipated."
Reaching 600,000 housing starts in 2011 is questionable, he said, but housing starts in the 700,000 to 750,000 range is likely for 2012. While much depends on the actions of lawmakers in Washington, D.C., he added: "Clearly, it will be better next year than this year," Holley said.
The Seattle-based company reported earnings of $44 million in the second quarter, up from $35 million in the same quarter last year. Sales increased to $284 million, up from $258 million.