Norbord Inc. (TSX:NBD) reports that 2014 was disappointing year for the wood panel manufacturer, but it sees better days ahead due to a planned merger with Ainsworth Lumber (TSX:ANS) and prospects for improved conditions in its core markets, particularly the United States.
The company, which reports in U.S. dollars, said Wednesday it earned $3 million or six cents per share in the fourth quarter of 2014, compared with a profit of $2 million or four cents per share a year ago.
Norbord's sales for the three months ended Dec. 31 were US$282 million, down from US$302 million the third quarter of 2014. The company says the US$20-million reduction in sales year-over year was soft prices for oriented strand board.
The Toronto-based company — part of the Brookfield group — is a producer of oriented-strand board, a type of wood panel used in home construction.
For the full year, Norbord said it earned $26 million or 48 cents per diluted share on $1.2 billion in sales. That compared with a profit of $149 million or $2.79 per diluted share on $1.3 billion in sales in 2013.
In a note to shareholders, Norbord president and CEO Peter Wijnbergen said the company's financial performance "did not live up to our expectations" — with the U.S. house construction market improving more slowly than anticipated.
"While this is disappointing, we have continued to see double-digit year-over-year growth in our sales to home improvement centre and industrial customers, which has partially offset the slower-than-expected housing recovery," Wijnbergen said.
He also said the planned merger with Ainsworth — whose shareholders voted on Tuesday to approve the deal — will add a "new dimension" to Norbord's growth story and make it one of the world's largest and lowest-cost producers of OSB.
"It will also allow us to better serve customers across North America and gain access to growing Asian markets," Wijnbergen said.
Norbord has seven North American mills principally in the U.S. Southeast and one mill in Quebec as well as four in Europe. Ainsworth has four Canadian mills, one in Ontario and the others in Western Canada and an interest in the Interex export group of Canadian forestry companies.
The companies estimated at the time that the merger was announced in December that the deal would allow for $45 million in annual synergies over 18 to 24 months.
Both companies are majority-owned by Brookfield Asset Management (TSX:BAM.A), which will remain the main shareholder. Wijnbergen will remain in the top management position, while Ainsworth chief executive Jim Lake will serve as an adviser for six months.
This content appears as provided to The Globe by the originating wire service. It has not been edited by Globe staff.