Owens Corning Inc., the insulation maker that emerged from bankruptcy in October, has posted a $9 million loss from continuing operations for the fourth quarter, citing a weak U.S. housing construction market and a lack of storm-related demand for roofing.
The Toledo, Ohio-based company had netted $230 million a year earlier.
Sales fell 14 percent to $1.48 billion, the company said.
The slowdown in home construction will also hurt this quarter’s earnings, Owens Corning said, though results will improve through the rest of 2007 if housing starts stabilize.
The company forecast adjusted income from operations will exceed $415 million in 2007, less than the $569 million posted last year. Owens Corning said the projection is based on the National Association of Home Builders’ estimate of 1.54 million housing starts in 2007.
“Many industry and economic analysts, including the NAHB, believe that housing starts will stabilize through 2007,” the company said.
“Although Owens Corning expects that 2007 will be a challenging year, the company expects its business results to improve throughout the year if these forecasts materialize and as seasonality in home building creates gradual improvement for our businesses.”
Adjusted operating income excludes items related to the company’s bankruptcy, asbestos liabilities and restructuring.
Owens Corning was one of more than 70 U.S. public companies to seek bankruptcy protection in response to asbestos suits. Last Sept. 26, U.S. Bankruptcy Judge Judith Fitzgerald in Pittsburgh ordered the company to pay as much as $4.29 billion in cash and put 28.2 million shares into an asbestos victims’ trust. The payment would resolve more than $10 billion in asbestos claims.
Asbestos, used for decades in insulation, auto parts and construction, causes respiratory illness and cancer.
U.S. homebuilders started work last month on the smallest number of new houses since August 1997 as a glut of unsold homes and colder weather discouraged new projects.
Housing starts slumped 14.3 percent to an annual pace of 1.408 million, less than forecast and down from December’s 1.643 million rate, the Commerce Department said on Feb. 16 in Washington.
Including items related to the Chapter 11 proceedings, as well as gains because asbestos liabilities were lower than the company had booked, Owens Corning reported net income rose to $7.7 billion from
$338 million in the year-ago quarter.
The company said it’s “evaluating strategic alternatives” for its siding solutions division, which includes vinyl-siding manufacturing operations and the Norandex/Reynolds distribution unit.
The second division under review is Fabwel, which produces and fabricates composite components and sidewalls for recreational vehicles and cargo trailers.
