CHICAGO -- USG Corporation, a leading building products company, today reported second quarter 2008 net sales of $1.3 billion and a net loss of $40 million. For the same period a year ago, the corporation recorded net sales of $1.4 billion and net earnings of $56 million.
"The steep decline in the U.S. housing market, combined with unprecedented increases in the cost of key raw materials and energy, resulted in losses in our core wallboard business," said William C. Foote, USG Chairman and CEO. "Our other businesses are performing reasonably well, despite their own challenging market conditions.
Here is a summary of core business results:
North American Gypsum
USG's North American Gypsum business recorded second quarter 2008 net sales of $625 million and an operating loss of $56 million, which included restructuring charges of $9 million. Net sales of $754 million and operating profit of $42 million were reported in last year's second quarter. North American Gypsum's operating profit for the second quarter of 2007 included a $12 million restructuring charge related to salaried workforce reductions and a plant shutdown.
Building Products Distribution
L&W Supply Corporation and its subsidiaries, which comprise USG's building products distribution business, reported second quarter 2008 net sales of $542 million, a decline of $112 million, or 17 percent, compared to the second quarter of 2007. The sales decline reflects weak residential construction demand, which reduced wallboard selling prices and volumes.
During the second quarter of 2008, L&W Supply's gypsum wallboard shipments declined by 25 percent compared with last year's second quarter. Reflecting the relative strength of the commercial construction market, total sales of non-wallboard products were flat, but sales of ceiling products and construction metal were up compared to the second quarter of 2007.
L&W Supply reported operating profit of $7 million in the second quarter of 2008, which included restructuring charges of $5 million. In last year's second quarter, operating profit was $45 million after a $1 million restructuring charge. The decline in operating profit compared to the second quarter of 2007 was largely due to lower shipments and margin for gypsum wallboard. Second quarter operating profit was up $8 million compared to the first quarter of 2008 as a result of improved wallboard and complementary product volumes and the impact of cost reduction efforts.
As part of the company's ongoing efforts to manage its cost structure to market conditions, L&W Supply has closed 20 locations since the beginning of the year. At the end of the second quarter of 2008, L&W Supply and its subsidiaries operated 230 locations.
Worldwide Ceilings
USG's Worldwide Ceilings business reported second quarter 2008 net sales of $237 million, a record for any quarter in its history. Second quarter 2008 net sales rose $27 million, or 13 percent, compared with the second quarter of 2007. Operating profit, also an all-time record, was $28 million in the quarter, an increase of $11 million, or 65 percent, compared with a year ago. Second quarter 2008 operating profit included restructuring charges of $2 million. Second quarter 2007 operating profit included restructuring charges of $1 million.
USG Interiors reported second quarter 2008 net sales of $141 million and operating profit of $19 million. This compared with net sales of $135 million and operating profit of $12 million for the second quarter of 2007. These results reflect improved pricing for ceiling tile and grid and lower grid manufacturing costs, partially offset by lower shipments and higher manufacturing cost for ceiling tile.
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