Norbord’s European mills post strong Q17 May 2019
Wood-based panels producer Norbord’s European operations reported a 17% growth in Q1, 2019 adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) to €18.75m, compared to a year ago.
“In Europe, our panel business had another good quarter, delivering 17% more adjusted EBITDA year-over-year due to continued strong OSB demand in our key markets and the ramp-up of our modernised and expanded Inverness, Scotland mill,” the company said.
“In Europe, panel markets remained strong, driven by continued OSB demand growth in Norbord's core geographies.”
Norbord said average panel prices in Europe (in local currency terms) were down a modest 3% from the prior quarter due to seasonality and sales mix, but up 5% versus the same quarter last year. Norbord’s shipments were 15% higher than the prior quarter and 13% higher than the same quarter last year.
The European mills produced at 89% of stated capacity in the quarter, unchanged from the prior quarter and compared to 86% in the same quarter last year.
Capacity utilisation was unchanged quarter-over-quarter as the new finishing line at the Inverness was being commissioned during Q1. Capacity utilisation increased year-over-year due to the continued ramp-up of the reinvested Inverness mill following its start-up in the fourth quarter of 2017.
Earnings group-wide for Norbord reduced to US$42m in Q1 (Q1, 2018: US$170m) due to lower North American OSB prices.
“The pace of US housing construction began to decelerate in the second half of last year and this trend carried over into the first quarter," said Peter Wijnbergen, Norbord's President and CEO.
Year-to-date US housing starts were down 10% versus the same period in 2018, with single-family starts, which use approximately three times more OSB than multifamily, decreasing by 5%. Wet weather exacerbated a seasonal slow time of building activity. As a result, Norbord took extensive downtime across its North American mills.
“US housing demand has clearly pulled back in the last nine months and the market has yet to recover in terms of volume,” the company said. “We remain of the view that this is a pause rather than a directional shift.”