Chicago, IL - USG reported that their U.S. ceilings unit profit was down 36% to $7 million during the latest April-June quarter. The consolidated Worldwide Ceilings unit for USG reported operating profit of $9 million which is an 18% decline from prior year. In addition to the $7 million operating profit in the United States, USG reported $1 million operating profit from ceilings in Canada and $1 million operating profit from their International operations.
Net sales revenue for the U.S. ceilings unit was down 2%-3% to $114 million during the quarter. Total Worldwide Ceilings net revenue for the quarter was $154 million.
The decline in profitability was largely due to lower shipments, an increase in the cost of steel and higher energy costs. While those cost increases have been partially offset by higher selling prices and improved operating efficiencies, margins remain under pressure in the Ceilings business.
With approximately $404 reported in Ceilings assets at the end of 2002 it is estimated that USG's Ceilings performance is approximately at economic break even (i.e. operating profit equal to cost of capital), but would need a doubling of operating profit to make a reasonable return on investment.
Full details of USG's second quarter results can be found at http://investor.usg.com/news/20030729-114928.cfm
