Norbord (TSE:NBD) shares were rising on Tuesday after the company, which makes wood panels for the home building market in North America, topped profit expectations for the second quarter, despite posting lower earnings year-over-year.
The company noted the drop was due in large part to the "exceptional" North American OSB prices seen in the first half of last year.
Shares were last up over 8 percent at C$24.15 in Toronto, paring year-to-date losses to under 29 percent.
For the three months to June 30, the company recorded net earnings of $11 million, or 20 cents per diluted share, compared with $53 million, or 99 cents per share, in the corresponding period of 2013. Still, the latest figure beat the Thomson Reuters mean estimate of 13 cents.
Sales dropped to $311 million from $365 million a year earlier.
“In North America, homebuilding activity continues to improve. But the pace has been held back by labour availability and a lack of entry-level buyers and OSB prices have been disappointing,” said president and CEO Peter Wijnbergen, in a statement announcing the quarterly financial figures released earlier today.
The chief executive said, however, that the company is not discouraged, and that it always expected it would take time for OSB demand growth to absorb the additional capacity that has been ramping up since early 2013.
"At Norbord, demand from our key customers in all core segments – new home construction, home improvement and industrial – continues to grow, driving 10% higher shipments so far this year.
"At the same time, our OSB cash production costs are declining due to improved productivity and lower raw material usages.”
In North America, OSB prices were relatively stable and continued to trade in a tight range in the second quarter, with the North Central benchmark averaging $219 per thousand square feet, unchanged from the previous quarter, but down from $347 per Msf in the same period last year.
OSB shipments in North America increased by 12 percent versus the same quarter last year as year-to-date U.S. housing starts were 6 percent higher than the same period in 2013, and permits were 5 percent higher.
The company also said European panel markets were a bit slower in the second quarter, reflecting a pullback from a particularly strong first quarter. Average panel prices held firm in the quarter there, steady with the first quarter and 2 percent higher than a year earlier.
Norbord declared a quarterly dividend of 60 Canadian cents for the quarter, payable on September 21 to shareholders of record on September 1.