LP profits plummet
OSB segment sales and income impact LP’s third quarter.
Louisiana-Pacific Corp. (LP) reported third quarter 2019 sales fell 18% to $603 million in comparison to third quarter 2018 sales of $737 million.
The Nashville, Tenn.-based building products and building solutions provider also reported a third quarter net income of $1 million – plunging from a net income of $124 million for the same period last year.
Siding segment sales increased by 7.5% to $259 million in the third quarter, compared to $241 million. The siding segment reported an operating income of $38 million compared to $51 million in the third quarter of 2018.
But LP’s Oriented Strand Board (OSB) segment posted sales of $197 million in the quarter, down 43% from sales of $349 million in the corresponding quarter a year ago. The OSB segment also reported an operating loss of $16 million compared to operating income of $106 million in the third quarter of 2018. LP said the declines were due to a negative from OSB selling prices.
The company’s Engineered Wood Products (EWP) segment reported net sales of $105 million in the third quarter compared to $110 million in the third quarter of 2018. The EWP segment reported an operating income of $2 million as compared to $6 million in the third quarter of 2018.
The bottom line: OSB pricing declines hammer sales and profits in the third quarter.
What the CEO said: “Through the third quarter, despite starts below last year, our sales and operations teams executed very well,” said Brad Southern, LP Chief Executive Officer. “The Siding segment achieved a second consecutive record quarter for LP SmartSide Strand revenue while also setting a record quarter for safety. The OSB segment had its lowest cash cost of production in two years while balancing supply and demand in a difficult market. In the third quarter, we reduced finished goods inventory by $29 million, which contributed to excellent cash flow for the quarter, and reached $28 million in year to date efficiency savings. This means we remain ahead of pace to achieve our 2021 targets.”
Company info: The full third quarter 2019 report can LP can be read here.
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