Norbord Inc. reported adjusted EBITDA of $138 million for the full-year 2019 compared to $724 million in 2018 on significantly lower realized North American oriented strand board (OSB) prices and shipment volumes, as well as lower European panel prices.
North American operations generated adjusted EBITDA of $85 million compared to $652 million in the prior year and European operations delivered adjusted EBITDA of $64 million compared to $86 million in the prior year.
For the fourth quarter of 2019, Norbord recorded adjusted EBITDA of $27 million versus $33 million in the third quarter of 2019 and $70 million in the fourth quarter of 2018. The quarter-over-quarter decline was primarily due to lower shipment volumes attributed to higher downtime, partially offset by modestly higher North American OSB prices. The year-over-year decline was primarily due to lower North American OSB prices as well as lower shipment volumes.
“2019 was a challenging year for Norbord,” said Peter Wijnbergen, Norbord’s president and CEO. “Our financial results were disappointing relative to our record performance in 2018, as the slowdown in U.S. housing starts through most of 2019 decreased North American OSB demand and a slowing of German industrial production put downward pressure on European panel prices. In the face of these challenges, we focused on reducing both costs and production, by indefinitely curtailing operations at our 100 Mile House, British Columbia mill and Line 1 at our Cordele, Georgia mill.
“Despite the tough markets, Norbord’s mills performed well. In North America, we consolidated downtime across our mill portfolio, which allowed us to more efficiently allocate production volumes. This resulted in record production at two mills and lower North American unit manufacturing costs. In Europe, we had record production at both our OSB mills, including at our expanded Inverness, Scotland mill, which continues to ramp production to meet growing demand. We reinvested more than $140 million in our mills and returned $130 million in cash to our shareholders through a combination of dividends and share buybacks.
“While our fourth quarter results reflected the continued weakness in North American housing markets, OSB prices have started to recover in recent weeks. Further, the outlook for new home construction in 2020 is encouraging, with December’s seasonally adjusted annualized pace of permits for U.S. housing starts up nearly six per cent year-over-year to 1.42 million. We expect a healthy pick-up in OSB demand as the spring building season approaches. In Europe, our panel business is set for another solid year as OSB demand in our key markets is supported by the ongoing trend of substitution against plywood and our reinvested Inverness, Scotland mill continues to ramp up. With a solid balance sheet and a diversification strategy that is growing non-traditional end uses for OSB to help cushion against volatility in housing demand, we believe Norbord is well positioned for 2020 and beyond.”
