Norbord: European business surprisingly well
Norbord Inc. today reported EBITDA of $45 million in 2011 compared to $107 million in 2010 on 15% lower North American OSB prices. Norbord recorded earnings of negative $11 million for the full year compared to earnings of positive $13 million in 2010.
"Our 2011 financial results are disappointing in absolute terms," said Barrie Shineton, President and CEO. "However, I am pleased that Norbord's operations in both North America and Europe performed exceptionally well this year. We achieved $25 million of margin improvement gains, reflecting an outstanding effort across our company in reducing manufacturing costs and increasing mill productivity. In Europe, our business held up surprisingly well in the face of increasing economic uncertainty. We increased shipments by 10% and stronger product pricing offset sharply higher raw material costs."
Market Conditions
The seasonally-adjusted US housing starts number for December was 657,000, 25% ahead of last year's year-end pace. Full year housing starts, including multifamily, were approximately 610,000 in 2011, up 3% from 590,000 in 2010. However, the single family component, which is more important to the OSB industry, declined by 9% in 2011. North Central benchmark OSB prices dropped from a peak of $218 per thousand square feet (Msf) (7⁄16-inch basis) in early January to a low of $165 per Msf in mid-May before stabilizing in a tighter range for the second half of the year. The North Central benchmark OSB price averaged $186 per Msf in 2011 compared to $219 per Msf in 2010, as the exceptional price spike of Q2 2010 did not repeat this year. In the South East region, where approximately 55% of Norbord's North American OSB capacity is located, prices remained at a discount to the North Central region, averaging $169 per Msf compared to $198 per Msf last year.
In the UK, the market remained steady with flat year-over-year housing starts, stable home prices and a more positive mortgage lending environment. In Germany, Norbord's largest Continental market, housing starts averaged 20% higher than 2010.
Norbord's European panel markets remained relatively robust throughout 2011. All panel prices increased, reflecting industry efforts to recover substantially higher raw material input prices. OSB prices peaked mid-year and averaged 8% higher year-over-year. Particleboard and MDF prices firmed throughout the year, increasing 15% and 14%, respectively. Norbord expects this positive dynamic to continue at least into the first half of 2012 despite declining consumer confidence across Europe and the negative impact of the European sovereign debt crisis.
In 2011, European currencies remained in a range that continued to benefit Norbord's primarily UK-based operations. Exports from the Company's UK-based manufacturing plants to Continental Europe increased again this year.
"Our 2011 financial results are disappointing in absolute terms," said Barrie Shineton, President and CEO. "However, I am pleased that Norbord's operations in both North America and Europe performed exceptionally well this year. We achieved $25 million of margin improvement gains, reflecting an outstanding effort across our company in reducing manufacturing costs and increasing mill productivity. In Europe, our business held up surprisingly well in the face of increasing economic uncertainty. We increased shipments by 10% and stronger product pricing offset sharply higher raw material costs."
Market Conditions
The seasonally-adjusted US housing starts number for December was 657,000, 25% ahead of last year's year-end pace. Full year housing starts, including multifamily, were approximately 610,000 in 2011, up 3% from 590,000 in 2010. However, the single family component, which is more important to the OSB industry, declined by 9% in 2011. North Central benchmark OSB prices dropped from a peak of $218 per thousand square feet (Msf) (7⁄16-inch basis) in early January to a low of $165 per Msf in mid-May before stabilizing in a tighter range for the second half of the year. The North Central benchmark OSB price averaged $186 per Msf in 2011 compared to $219 per Msf in 2010, as the exceptional price spike of Q2 2010 did not repeat this year. In the South East region, where approximately 55% of Norbord's North American OSB capacity is located, prices remained at a discount to the North Central region, averaging $169 per Msf compared to $198 per Msf last year.
In the UK, the market remained steady with flat year-over-year housing starts, stable home prices and a more positive mortgage lending environment. In Germany, Norbord's largest Continental market, housing starts averaged 20% higher than 2010.
Norbord's European panel markets remained relatively robust throughout 2011. All panel prices increased, reflecting industry efforts to recover substantially higher raw material input prices. OSB prices peaked mid-year and averaged 8% higher year-over-year. Particleboard and MDF prices firmed throughout the year, increasing 15% and 14%, respectively. Norbord expects this positive dynamic to continue at least into the first half of 2012 despite declining consumer confidence across Europe and the negative impact of the European sovereign debt crisis.
In 2011, European currencies remained in a range that continued to benefit Norbord's primarily UK-based operations. Exports from the Company's UK-based manufacturing plants to Continental Europe increased again this year.