Norbord: Good results, improving markets

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Norbord Inc. today reported EBITDA of $21 million in the first quarter of 2012 compared to $9 million in the prior quarter and $14 million in the same quarter last year. The improvement reflects a 7% quarter-over-quarter increase in North American benchmark OSB prices as well as continuing strong results from the Company's European operations.

Market Conditions
In North America, US housing starts were 20% higher during the first quarter of this year compared to the same period last year and permits were 30% higher. More importantly for the OSB industry, US single family housing starts were 17% better versus last year. In this firmer demand environment, the North American North Central benchmark OSB price averaged $203 per thousand square feet (Msf) (7⁄16-inch basis) in the first quarter compared to $190 per Msf in the prior quarter and $198 per Msf during the same quarter last year. In the South East region, where approximately 55% of Norbord's North American capacity is located, prices averaged $190 per Msf in the first quarter, compared to $166 per Msf in the prior quarter and $177 per Msf during the same quarter last year. Expert forecasts for 2012 US housing starts now range from 680,000 to 770,000, which is 11%-26% higher than last year's 610,000 starts.

In Europe, despite the negative economic news, overall panel markets continued to show strength. In the UK, where the majority of Norbord's European assets are located, the housing market continues to slowly recover with home prices, housing starts activity and mortgage lending all trending up. In addition, the UK government recently announced the "NewBuy" program to spur new home sales and increase home buyer eligibility by guaranteeing mortgages. The UK government also announced legislative changes aimed at unblocking the permit planning pipeline. Both of these initiatives are expected to be positive for housing demand over the longer term.

In the quarter, average European panel prices softened slightly compared to the previous quarter but remain higher than last year. After peaking mid-last year, OSB prices were 7% lower than the same quarter a year ago and 5% down from the prior quarter. However, particleboard and MDF prices are holding on to double digit gains compared to the same quarter last year, at 13% and 11% higher, respectively. Quarter-over-quarter, particleboard and MDF prices were flat.

Norbord is releasing first quarter operating results in advance of its full results to facilitate exploration of the broadest possible range of refinancing options related to its July 1, 2012 bond maturity. Full first quarter 2012 results, including the shareholder letter, press release, management's discussion and analysis and unaudited consolidated financial statements, are expected to be released on April 27, 2012
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