DOW JONES NEWSWIRES
USG Corp.'s (USG) first-quarter loss widened slightly on write-downs and amid a steep drop in revenue as the housing market, a major source of the building materials maker's business, remains weak, with little relief seen this year.
Home builders and suppliers continue to suffer amid the global recession as foreclosures and inventories mount, home prices decline and lending standards remain extremely tight.
Chief Executive William Foote said the company continues to make progress toward profitability despite challenging market conditions, helped by its cost-cutting actions last year, which included cutting 20% of its work force in November, and by higher prices for wallboard.
The company posted a net loss of $42 million, or 42 cents a share, compared with a year-earlier net loss of $41 million, or 42 cents a share. The latest results include 7 cents a share in write-downs.
Revenue decreased 28% to $864 million.
Analysts surveyed by Thomson Reuters expected a loss of 73 cents a share on revenue of $952 million.
Gross margin rose to 5.6% from 3.9%.
Losses in the North America gypsum business narrowed on higher wallboard margin and results at U.S. Gypsum Co. as sales slid 23%. The L&W Supply building unit's sales dropped 28% on lower wallboard shipments while the worldwide ceiling segment's sales fell 19% as operating profit slid 25%.
Companies like USG are poised to benefit from proposed tax cuts by the Obama administration, which would likely allow companies to use tax losses to offset taxable U.S. profits earned in the past five years.
Meanwhile, billionaire investor Warren Buffett's holding company Berkshire Hathaway Inc. (BRKA) said in February it would hold a 34.6% stake in USG after the conversion of the $300 million notes held by Berkshire. Berkshire is already the largest shareholder of USG.
USG shares were inactive in premarket trading Tuesday, after closing Monday at $9.53.
-By Kerry E. Grace, Dow Jones Newswires; 201-938-5089; kerry.grace@dowjones.com