A strong housing market and rising home heating bills boosted sales at insulation and building products maker Owens Corning to record levels in 2005, although the firm“s financials were punished by a…
A strong housing market and rising home heating bills boosted sales at insulation and building products maker Owens Corning to record levels in 2005, although the firm“s financials were punished by additional provision for its asbestos liability. Revenue rose 11% in 2005 to USD 6.3 billion from USD 5.7 billion in 2004. However, the Fortune 500 company showed a net loss of USD 4.1 billion, compared to a profit of USD 204 million in 2004, as a consequence of non-cash accounting charges. The firm“s asbestos liability estimate increased and it was hit by an unexpected interest payment from a court ruling in its Chapter 11 bankruptcy case. The charges were taken before the 4Q 2005 when net profits increased to USD 338 million, or nearly five times those of a year earlier. Fourth quarter revenues were USD 1.7 billion. Because the company“s stock is due to be wiped out under its bankruptcy-exit plan, it does not publish per-share earnings. Owens Corning shares, which benefitted from speculation that their value might be partially restored with Congressional action on asbestos litigation relief, have fallen in February 2005 as prospects for a legislative remedy receded. Owens Corning is the USA“s leading manufacturer of building insulation, and has now regained market share it lost in 2000 after filing for Chapter 11 as part of a process for discharging multi-billion dollar asbestos liability, Mr. Brown said. “We made more fiberglass building insulation in 2005 than any year in our history,” the chief executive said. To cope with demand, the company will soon reopen an idle plant in Mount Vernon, Ohio and re-start a production line in Quebec. Tight insulation supplies, which Mr. Brown expects to continue in 2006, have allowed Owens Corning and other producers, to boost prices. Demand could be hit if the expected fall in housing starts becomes a reality, although it will remain strong due to other factors. Homeowners will continue to need insulation for re-modeling projects, Mr. Brown said. Rising energy prices have been a boon and a blight for the company; production costs have risen but so has demand for insulation as consumers try to cut their heating bills. Owens Corning has been working with builders and retailers to inform the public about energy-conservation tax credits signed into law by President Bush and available since 1 January 2006.