July 25, 2008 / 11:20 AM / in 9 years

Norbord posts bigger second-quarter loss

TORONTO (Reuters) - Norbord Inc NBD.TO reported a bigger second-quarter loss on Friday as a collapse in the U.S housing market continued to drain demand for its wood panels.

The company, which has 15 factories in the United States, Europe and Canada, said it lost $37 million, or 25 cents per share, in the period ended June. That compares with a loss of $15 million, or 11 cents per share, in the year-ago period.

Norbord said a charge related to an industry-wide antitrust litigation settlement forced it to take a pre-tax charge of $32 million, or 15 cents per share.

Before the charge, Norbord said it recorded a loss of $15 million in the quarter, or 10 cents a share.

The mean estimate from analysts was for a loss of 12 cents a share before items, according to Reuters Estimates.

Revenue declined 9 percent to $262 million.

Norbord said North American prices for its oriented strand board (OSB) rose 30 percent, but it said prices are expected to moderate throughout the remainder of the year.

Rising energy costs also hurt earnings.

“Earnings will remain in the red until we see some semblance of a rebound in the U.S. housing market or significant additional OSB capacity shut downs,” said Dundee analyst Richard Kelertas in a note ahead of the results.

“We do not expect much improvement in OSB prices over the course of 2008. Mortgage foreclosures are up, housing starts are way down and the repair and renovation market is struggling as well.”

About 75 percent of OSB demand is driven by the residential construction market, Kelertas said.

Shares in the Toronto-based company, which also produces plywood and particleboard, have shed close to 60 percent of their value so far this year. The stock closed at C$4.90 on the Toronto Stock Exchange on Thursday.

($1=$1.01 Canadian)

Reporting by Frank Pingue and Susan Taylor; Editing by Ka Yan Ng

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