Owens Corning, a leading provider of building materials systems and composites systems, has reported higher first-quarter profits that beat estimates by a penny, aided by a 20% jump in sales at its Co…
Owens Corning, a leading provider of building materials systems and composites systems, has reported higher first-quarter profits that beat estimates by a penny, aided by a 20% jump in sales at its Composites Systems unit. The Toledo, Ohio-based company said profits rose 9% to US$ 48 million, or 84 cents a fully-diluted share, from US$ 44 million, or 77 cents a year ago. Analysts on average were looking for Owens Corning to earn 83 cents a share in the latest quarter, according to First Call/Thomson Financial, which tracks such estimates. The numbers were released before the market opened. Owens was off 1/8 at 19-1/4 in early New York Stock Exchange trading, or 5-7/8 above its 52 week low of 13-3/8. First-quarter sales rose 11% to US$ 1.26 billion from US$ 1.13 billion. “We realized solid gains from our productivity initiatives and the carryover effect of our 1999 pricing actions,” Glen Hiner, Owens“ chairman and chief executive said in a statement. However, he noted that the company cannot fully pass through the rapidly rising cost of asphalt and PVC resin, which continues to drag on earnings of its buildings materials systems unit. Sales of building materials systems were US$ 1.01 billion in the first quarter, up nine percent from a year ago. Earnings of US$ 76 million were flat with the prior year. Owens said it continues to monitor demand in this unit and has adjusted capacity utilization to maximize productivity. It added that cost increases for asphalt and PVC resin constrained profits for its roofing systems and exterior systems businesses. In response, Owens said it has accelerated its productivity programmes, tightened spending and announced price increases. In the composite systems unit, sales were up 20% to US$ 284 million, while earnings increased 77% to US$ 55 million, due to higher volumes, more favourable pricing, and productivity improvements. Sale volumes increased in all key geographic markets, especially in the Asia Pacific region due to acquisitions in Korea and Australia last year. Owens sees strength across each of its geographic regions for composite systems and in all major market segments and will make additional capacity investments to meet growing customer demand. The company said it continued to leverage the Internet and had more than 6,000 visits to its www.owenscorning.com web site every day, which was up 240% over last year. It noted that debt rose US$ 600 million from the 1999 first quarter to the first quarter of 2000 because of the National Settlement Programme inventory and that this will result in a higher cost of borrowed funds in future quarters.