LP Sees Bottom in Building Bust, Brazil One of Few Bright Spots

(image courtesy LP)

(image courtesy LP)

Nashville-based Louisiana-Pacific is still waiting for home construction to turn around after another poor showing in 2011. But the company – which makes siding and engineered wood products – also sees signs of life.

The number of single family homes built in 2011 was at its lowest point since the 1940s, according to the National Association of Home Builders. But LP CEO Rick Frost says for the first time in three and a half years, projections are being revised up, not down. He tells investors that he believes the U.S. has hit a bottom, though he remains cautious.

“Remember this time last year, we were all fooled with a good January, and then the rest of the year sputtered out.”

LP just released its year end results, and the company lost more than $160 million, surpassing losses in the previous year. One of the few bright spots is a growing operation in South America, where LP runs mills in Chile and Brazil.

South America is still a relatively new market for LP’s siding and engineered wood. But already the continent represents roughly 10 percent of the company’s total revenue.

From its facilities in Chile and Brazil, LP has also begun exporting to China. CEO Rick Frost says – however – the Asian market isn’t using its products for construction. He says they’ll take the oriented strand board – which is made of glued-together wood chips – and decorate their homes or build indoor shrines.

“It’s a different thing for you and I, but it’s a very valued product and they really, really like it.”

Frost says places like China are not dependable markets for LP, but they’re good for selling off excess product.


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