Owens Corning: lower charges reduce 4Q 2008 loss

Owens Corning Inc.“s 4Q 2008 net loss narrowed on fewer charges as the building-products maker announced further cost-cutting moves to deal with high inventory levels.
The company expects weakness i…

Owens Corning Inc.“s 4Q 2008 net loss narrowed on fewer charges as the building-products maker announced further cost-cutting moves to deal with high inventory levels. The company expects weakness in the composites business to continue in 2009 until inventories level out. Owens Corning said it will cut costs further by reducing capacity, cutting jobs and delaying capital projects. Owens Corning said 2009 capital spending will be less than USD 275 million, down almost USD 100 million from a year earlier. Companies that are heavily exposed to the housing market have been hit hard as the number of new homes being built drops sharply in the global recession and tight credit markets. Owens Corning posted a net loss of USD 45 million, compared with a year-earlier net loss of USD 46 million. On a per-share basis, losses were flat at USD 0.36. Excluding one-time items, among them acquisition- and restructuring-related costs, earnings fell to USD 0.13 from USD 0.31. Revenue slipped 1% to USD 1.29 billion as higher sales in the roofing and asphalt segment more than offset lower demand in the composites and insulation businesses, which Owens Corning said has been hurt by the continued decline in new residential construction. Analysts polled by Thomson Reuters expected earnings of USD 0.15 a share on revenue of USD 1.38 billion. Gross margin fell to 15% from 16% amid lower margins in the company“s insulation business, where net sales for 2008 were USD 1.6 billion, down 11% from USD 1.8 billion in 2007. Earnings for Owens“ composite solutions business, the company“s largest segment and the one business with fewer ties to the US housing market and more links to international markets, jumped 69% while sales increased 39%, thanks to acquisitions. Government data in January 2009 showed new-home sales fell 15% in December 2008, the worst year since 1982. The company has been looking to other opportunities such as the demand for “green” materials, but it still remains closely tied to the US housing market.