Universal feels pinch of higher lumber prices
Universal Forest Products Inc. posted a net loss of $793,000 on net sales of $423.7 million for the fourth quarter of 2008, compared to a 2007 fourth-quarter loss of $11.0 million. Net earnings for the full year were $4.3 million on net sales of $2.2 billion, compared with net earnings of $21 million on net sales of $2.5 billion for 2007.
According to the company, although Universal continues to feel the effects of a contracting economy and distressed markets it was able to partially mitigate that impact by continually sizing its operations to its business opportunities.
“Our ability to resize our company to market demands has enabled us to post a modest profit in extraordinarily difficult times,” said CEO Michael B. Glenn. “We anticipate additional challenges, but, with the hard work of our people and the strengths of our strategies, we’re confident in our ability to take advantage of continuing business opportunities, especially in light of our expectation that many of our competitors will be forced to exit the business.”
The composite lumber price was 15 percent lower in the fourth quarter of 2008 than 2007, which negatively affected sales, the company indicated. By market, Universal posted the following gross sales for 2008:
- Do-it-yourself/retail: $151.8 million for the fourth quarter of 2008, a decrease of 8 percent from the same period of 2007. Annual gross sales of $910.7 for 2008 reflected a 7.8 percent decrease from 2007.
- Industrial packaging/components: $124.2 million for the fourth quarter, a decrease of 9.5 percent from the fourth quarter of 2007. For the year, gross sales of $605.1 million represented a 2.2 percent increase over 2007.
- Site-built construction: $93.4 million for the fourth quarter of 2008, a decrease of 28.8 percent from the same period of 2007. Annual gross sales of $454.8 million represented a decrease of 22.7 percent from 2007.
- Manufactured housing: Fourth-quarter sales of $57.8 million were 34.1 percent lower than the same period of 2007. Annual gross sales of $303.5 million represented a 22.6 percent decrease from 2007.
Universal management believes lumber prices will remain depressed through 2009 and expects the current challenging conditions to prevail throughout this year, as well. According to Universal, current economic conditions and uncertainties limit the company’s ability to provide meaningful guidance for ranges of likely financial performance so it will not provide guidance for the foreseeable future.