LP considers construction of second mill in Brazil, aims for tenfold increase in exports to China; CEO says exports remain key growth area for company
November 8, 2011
– Louisiana-Pacific Corp. (LP) is considering the construction of a second mill in Brazil as part of a Latin American expansion project the company hopes will offset the effects of the weak U.S. home construction market.
CEO RIck Frost mentioned the proposal during a conference call to discuss the Nashville, Tennessee-based company's third quarter results, The Wall Street Journal reported on Nov. 7. He added: "The [U.S.] housing market remains weak about any way you cut it."
LP has already expanded its two mills in Chile and its facility in Brazil, and continues to focus on offshore markets for its products, especially China. Chile's earthquake last year helped boost LP's sales to that market, as the country moved away from concrete structures in favor of wood, which is seen as having greater resilience to earthquakes. But Brazil is more difficult to penetrate as changes to the country's building code are needed to promote new construction techniques that favor wood.
Frost said the company has been pursuing a strategy of increasing its business to China tenfold, noting that exports remain a key growth area for the company. Exchange rates, he added, would play a major role in whether the company achieves its goals in China because of costs associated with shipping wood.
Frost said he foresaw an increase in U.S. single-family home of between 40,000 and 50,000 units in 2012.
LP reported a net loss of US$65.6 million in Q3, compared with a $32 million loss a year earlier, and included a $62 million write-down on its LSL plant in Houlton, Maine. Seven of the company's 10 U.S. plants are currently either idled or operating at reduced capacity.
The primary source of this article is the Wall Street Journal, New York, on Nov. 7, 2011.