Owens Corning reports composites sales down in first quarter

The company reports a net loss of $28 million for the 2009 quarter.

Owens Corning’s Composites business includes the Reinforcements sector (which manufactures and sells glass fibre reinforcements) and the Downstream sector (which manufactures and sells glass fibre products in the form of fabrics, mat, veil and other specialised products).

Net sales in the Composites segment were $345 million in first quarter of 2009, down 48% from the same period in 2008. About two-thirds of this decrease was a result of lower sales volumes. The remainder was the result of the May 2008 divestiture and the effect of translating sales denominated in foreign currencies into US dollars.

Earnings before interest and taxes (EBIT) for the Composites business dropped significantly in the first quarter of 2009 to a loss of $18 million. Most of this decrease was the result of lower sales volumes within the Reinforcements business, including the impact of under-utilisation of production capacity. Actions were taken during the first quarter of 2009 to reduce production to levels consistent with meeting the company's inventory reduction goal and to reduce costs by shutting down production lines and reducing head count.

Outlook

Owens Corning expects the challenging business environment to persist through 2009. The company continues to take actions to reset its cost structure, including significant capacity and workforce reductions, and lower capital spending. These actions are expected to contribute to cost reductions of about $160 million in 2009.

In the Composites business, based on glass fibre reinforcements sales trends in the first quarter of 2009, Owens Corning believes that demand will continue to improve during 2009, but remain below the levels seen in the first three quarters of 2008.