USG swings to profit

USG Corp. reported net sales of $828 million for its third fiscal quarter, a 9% increase over net sales of $763 million in the same period a year ago. Operating profit for the third quarter, which ended Sept. 30, 2012, was $29 million, compared with a $79 million loss from continuing operations in the third quarter of 2011.

The third-quarter net loss from both continuing and discontinued operations was $29 million. This result compares with a $115 million net loss from both continuing and discontinued operations in the third quarter of 2011. During the third quarter, the company announced it had entered into a definitive agreement to sell its European operations. Although that sale has not yet been consummated, results from European operations have been reported as discontinued operations for the 2012 and 2011 periods. Those operations reported net sales of $27 million and operating profit of $1 million for the third quarter of 2012, and $29 million and $3 million, respectively, for the third quarter of 2011.

“Our innovative new products, modest demand improvement, new wallboard pricing strategy and recent restructuring efforts contributed to our third consecutive quarter of positive operating profit,” said James  Metcalf, USG’s chairman, president and CEO. “We achieved continued wallboard volume growth, and price was essentially flat compared with the prior quarter, with any improvement offset by regional and channel mix and freight cost fluctuations.”

Selling the company’s European operations, Metcalf said, “will allow us to reallocate assets from a lower-growth market to joint ventures supporting higher-growth markets in India, which will allow us to diversify the company’s earnings and offset some of the cyclicality in our core businesses.”

Although wallboard demand remains significantly below historical averages, the company’s wallboard division, L&W Supply, experienced a 10% rise in same-store net sales at its branch locations. And its newer introductions to the market are doing well. According to the Chicago-based company, its Sheetrock brand Ultralight panels accounted for 47% of all USG wallboard shipments in the United States.