20 May 1999: US building materials giant Owens Corning is expanding its fledgling services business in an effort to ease the impact of economic booms and busts on revenues, the company“s head said re…
20 May 1999: US building materials giant Owens Corning is expanding its fledgling services business in an effort to ease the impact of economic booms and busts on revenues, the company“s head said recently. Owens Corning chief executive Glen Hiner said he hopes the company“s expertise in fibreglass and insulation will boost the services business over the next two years to 5% of revenues, or about US$ 250 million. Currently the segment generates 1% of revenues, he said after speaking at a Northeastern University forum. “We want to get our company over to more non-cyclic proportions and that“s why we“re concentrating so much on systems and services,” said Hiner, who joined Owens in 1992 after 35 years as a General Electric Co. executive. “Services are a negligible part of our revenues today and we want to grow that as quickly as we can going into the future.” Companies whose revenues are tied to sectors like housing, automobiles and paper are known as “cyclicals” because they tend to rise and fall sharply in tandem with economic health. Service companies are typically less subject to those swings. Owens Corning, known best by its Pink Panther brand of insulation, is also a major supplier of roofing materials. Its move toward services came on revelations that “the guy who makes the most money off the windows is the window washer,” the Fortune 500 CEO said. Owens should meet Wall Street expectations for continued earnings growth in the second quarter based on a “very good April,” he said. The investment research network First Call estimates that Owens will have a 20% rise in earnings per share for the second quarter of US$ 1.27. The company reported record first quarter profits in April of US$ 44 million, or US$ 0.77 per share, beating analysts expectations by US$ 0.03. “What we“re benefiting from is a very strong demand for our products, a high market share and a terrific cost base,” Hiner said. There are no planned price increases, he added. Hiner was uncertain about demand from Asia and Latin American markets but saw no let-up in strong consumer spending and housing in the United States.