Owens Corning's building material segment saw earnings before interest and taxes (EBIT) fall 30% in 2010 from the year before to hit $281 million even though the segment's net sales declined just 2% to $3.24 billion, the company reported today.
Within the segment, insulation slipped deeper into the red, posting an EBIT loss of $102 million for the year vs. a $96 million loss in 2009, on a 1.1% drop in sales to $1.31 billion. The segment's roofing business also suffered, as it reported an EBIT decline of 24% to $405 million on a 2.7% fall in sales to $1.85 billion.
The building materials segment's "other products" business posted an EBIT of negative $22 million, down from the negative $33 million EBIT posted in 2009, as sales fell 5% to $87 million.
"In building materials, our roofing business delivered 22% operating margins despite enduring a weak market," said chairman and CEO Mike Thaman. "Looking forward to 2011, we expect improving demand in all of our major end markets, and we are confident in our ability to deliver another year of adjusted earnings per share growth of more than 30%."
That confidence was tempered, however, by Owens Corning's listing of various uncertainties that could affect roofing margins. It said those include competitive pricing pressure and the cost and availability of raw materials, particularly asphalt. Meanwhile, it forecast U.S. new residential construction would be weak, improving modestly in the second half of 2011. "However, the timing and pace of recovery remains uncertain," the company said. It noted that it recently introduced EcoTouch insulation, a green building material, and earlier this week entered an agreement with Masco Corp. calling for it to be the primary insulation provider to Masco Contractor Services.
The Toledo, Ohio-based company cited a weakness in asphalt shingle demand as well as a decline in selling prices of the company's roofing shingles as causes for the decline across the building material segment. Lower margins and decreased volume had a huge impact on the segment, the company said.
Company-wide, Owens Corning posted net earnings attributable to the company of $933 million, a 93% increase over the $64 million net earnings the company announced in 2009. The company also posted net sales for the year of $4.9 billion, an increase over the $4.8 billion in net sales the company posted in 2009.
"Our 2010 financial performance was strong," said Thaman. "Owens Corning's portfolio of market-leading businesses delivered robust profitability despite markets that continued to perform well below their potential."