Weather chaos hammers OSB profits

Sales of wood building products for the first three months of the year, during which the US was hit extreme weather, were down 16%. The US$14m loss compares with income of US$65m in the first quarter of 2013.

OSB sales were down 32% at US$195m, resulting in losses on the panel product of US$2m. This compared with income of US$98m a year before. While sales volumes of OSB were up 6%, a 38% drop in prices due mostly to the bad weather, accounted for an equivilent US$113m in lost income, L-P said.

Production of OSB was up 7% at 965 million ft2.

Sales of I-joist, LVL and LSL engineered wood products were largely unchanged at US$66.4m with losses also largely unchanged at US$3m. Sales of siding was also little changed at US$145m with profit down slightly at US$19.2m.

"The severe weather across much of North America in the first quarter took its toll on building activity and logistocs. The rail transport system in the US and Canada were in disarray, which caused unplanned downtime at our operations, increased inventory and late shipments," said CEO Curt Stevens.

"With better weather we are hopeful that housing starts will accelerate. Our order files are much stronger than we have seen over the last several quarters and our customers have a positive outlook fo rthe rest of the year."

One analysts said that although L-P had a bad first quarter, it had controlled costs and the 38% fall in OSB prices largely due to the weather was against an industry-wide decline closer to 50%.