TORONTO - Norbord Inc. (TSX and NYSE: OSB) reported $61 million in earnings for the first quarter of 2016 versus $16 million in the first quarter of 2015, and $57 million in the fourth quarter of 2015.
Norbord says the year-over-year improvement is primarily due to higher North American oriented strand board (OSB) prices and shipment volume, as well as lower resin prices and the weaker Canadian dollar. European operations represented $10 million of revenues.
"Despite the seasonally lower North American benchmark OSB prices, our mills in both North America and Europe continued to deliver strong operational results," said CEO Peter Wijnbergen. The results include the acquisition of Ainsworth a year ago.
"The pace of U.S. housing starts is 14 percent higher than this time last year, and single-family building activity is up even more. North American OSB demand continues to grow, sales to all our key customer segments are improving and our order files are strong.
In North America, Wijnbergen says the pace of single-family starts, which use approximately three times more OSB than multi-family, increased by 23 percent. He cites a consensus forecast from U.S. housing economists of approximately 1.23 million starts in 2016, which translates to an 11 percent year-over-year improvement.
Wijnbergen said benchmark OSB prices are up 16 percent over a February low as the seasonal pick-up in demand begins to materialize. OSB prices continued to rise Europe, and are now starting to turn up in the UK.
First quarter North American benchmark OSB prices were $225 per thousand square feet (Msf) in the North Central region. In the Southast region, where about 35 percent of Norbord's North American OSB capacity is located, prices averaged $215 per Msf in the quarter. In the Western Canada region, where 30 percent of Norbord's North American capacity is located, prices averaged $191 per Msf in the quarter.
In Europe, Norbord's core panel markets in the UK and Germany experienced strong demand growth in the quarter. "Work is underway on our $135 million capital investment to modernize and expand our Inverness, Scotland OSB mill, with construction commencing this quarter," Wijnbergen said.
Norbord says its operating North American OSB mills produced at 92 percent of capacity -excluding a pair of curtailed mills in Huguley, Alabama and Val-d'Or, Quebec- up from 86 percent in the same quarter last year. Capacity utilization increased due to fewer maintenance shutdown days, with improved productivity having additional impact year-over-year.
In January 2016, the Board of Directors approved a $135 million investment over the next two years to modernize and expand the Company's Inverness, Scotland OSB mill. Norbord has decided to move an unused second press from its Grande Prairie, Alberta mill for use in the Inverness project, which is expected to shorten the project timeline by up to six months.
Norbord Inc. says it is the world's largest producer of oriented strand board (OSB). In addition to OSB, Norbord manufactures particleboard, medium density fibreboard and related value-added products. Norbord employs 2,600 people at 17 plant locations in the United States, Canada and Europe.
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