Gypsum industry news

US: USG Corporation (USG) has announced the election of Matthew Carter Jr. to its board of directors. Carter will serve on the Audit and Governance committees of the USG board of directors. With his addition, USG's board now includes nine independent directors.

Carter is President, Sprint Global Wholesale & Emerging Solutions at Sprint Nextel Corporation. His leadership and experience spans more than 20 years across diverse industries with major companies such as Bristol Myers, Coca-Cola and Leap Wireless. Heavily involved in the telecommunications sector through his career, Carter holds a bachelor's degree from Northwestern University and a master of business administration from Harvard Business School.

"We are pleased to welcome Matt Carter to our board," said Jim Metcalf, chairman of the board, president and CEO of USG Corporation. "His history of leadership, vision, innovation and business transformation will be valuable assets as USG continues to create its own recovery and emerge as a stronger company."

US: A US federal judge has ruled that Taishan Gypsum Co, a Chinese wallboard manufacturer, must face claims over its allegedly tainted product, which has been blamed for causing foul odours, the failure of appliances and health problems. The ruling means homeowners will be able to pursue claims against the Chinese firm in US courts, increasing the pressure for a settlement similar to that reached between plaintiffs and Knauf in 2011.

Judge Eldon Fallon of New Orleans denied motions by Taishan to dismiss four lawsuits filed by homeowners whose properties were allegedly affected by faulty drywall. Fallon also denied a request by Taishan to vacate a US$2.6m default judgment that he levied against the company in May 2010 after it had failed to make appearances in one of the cases. The ruling is the latest victory for plaintiffs in hundreds of drywall lawsuits that have been consolidated in the New Orleans federal court.

After Fallon entered the US$2.6m judgment against Taishan, the company's lawyers made appearances in the case and argued that the court lacked personal jurisdiction over the company because of its lack of contacts with the United States.

"We believe that the court was in error for all the reasons reflected in our papers and discussed at the hearing," said Joe Cyr, an attorney for Taishan.

US: USG Corporation (USG) has announced that it has entered into a definitive agreement for the sale of its wholly-owned European business operations to affiliates of Gebr. Knauf Verwaltungsgesellschaft KG for approximately US$80m. The amount is subject to adjustment based on working capital and net debt levels at the closing of the deal.

The businesses being sold include the manufacture and distribution of Donn brand ceiling grid and Sheetrock brand finishing compounds throughout Europe, Russia and Turkey.

"While USG's European operations have been performing well, we prefer to focus our investment in higher growth markets," said James S Metcalf, Chairman, President and CEO. "We contacted more than 60 potentially interested parties, including both strategic buyers and private equity firms, and decided to sell the businesses following a thorough evaluation that produced strong interest. We're pleased with the value we are receiving for this group of assets."

US: Eagle Materials Inc has reported a 29% rise in total revenue for the first quarter of the 2013 fiscal year which ended on 30 June 2012. The North American building materials producer noted revenue of US$154m for the quarter, up from US$120m in the same period in 2011.

Eagle's gypsum wallboard sector reported a 36% increase in revenue to US$70.2m from US$51.3 in 2011. Improved wallboard net sales prices were the primary driver of the quarterly earnings increase in the company's gypsum wallboard and paperboard division. Sales volumes increased by 11% to 42.5MM² from 38.3MM².

US: Federal District Court Judge John E Steele has issued orders dismissing all claims against National Gypsum in the Brincku and Brucker lawsuits, which had claimed that National Gypsum's US-made wallboard had caused the same corrosive effects in the plaintiffs' homes as allegedly defective Chinese wallboard.

The lawsuits alleged that the company manufactured defective wallboard, which contained high levels of sulphur, released hydrogen sulphide gas from bacteria and corroded copper and other metals inside their homes. Unrebutted scientific evidence provided by the company proved this was not the case.

"We are extremely pleased that our company's products and reputation have been completely vindicated," said CEO Thomas C Nelson. "This ruling confirms what we have said all along: National Gypsum wallboard is a high-quality, safe and environmentally-sound product. Every single false allegation has been rebutted by sound science from the nation's leading laboratories and safety experts."

The court's ruling concludes a long saga which began in 2009. In response to the allegations, the company engaged Packer Engineering and Columbia Analytical Services, two independent testing laboratories, to conduct elemental sulphur, copper corrosion and gas chamber tests on the company's wallboard. Other professionals also tested the air, water and surrounding environments of the homes. These results were consistent with studies done for the Consumer Products Safety Commission by the Department of Energy's Lawrence Berkeley National Laboratory and Environmental Health & Engineering.

The dismissal of the Brincku and Brucker lawsuits is the latest in a series of similar cases that have been thrown out of court. In April 2011 an Arizona putative national class action case against National Gypsum was voluntarily withdrawn after the plaintiffs admitted that there was no scientific or causal evidence to support it. In October 2011, an Alabama lawsuit was dismissed with prejudice, meaning the plaintiffs are barred from bringing the same claim against the company in the future.

US/Oman: US-based USG Corporation (USG) has announced that it has entered into a strategic partnership with the Zawawi Group of Oman to meet the growing demand for its building products in the Middle East and India. The investment by USG opens up new opportunities for the group in the rapidly-growing Indian and Middle Eastern wallboard markets and will provide local projects better access to USG's industry-leading wallboard products.

USG's partnership with the Zawawi Group will be in two phases. The first phase will be establishment of a mining joint venture through which USG will acquire 55% of Zawawi Gypsum, which holds the mining rights to a gypsum quarry in Salalah, Oman. The joint venture will develop infrastructure and operate the quarry. The quarry is near to many ports and is thus in an ideal location to provide raw material for future USG wallboard plants and cement plants run by other companies. Quarry mining operations are targeted for startup in the third quarter of 2013.

The second phase of the partnership will see the construction of a 50/50 manufacturing joint venture between USG and Zawawi Minerals to build and operate a new wallboard plant in the Salalah Free Zone in Oman. The proposed plant site is close to the quarry and ports, allowing easy access to India and the rest of the Middle East. It is expected that the wallboard plant will be running by the end of 2013. USG expects the investment of approximately US$60m to be incurred over two years, with the majority in 2012.

"This is an important step forward in our strategic initiative to diversify the sources of USG's earnings by investing in higher-growth international markets," said James S Metcalf, Chairman, President and CEO of USG. "The market in India and the Middle East represents an attractive growth opportunity. We are thrilled to partner with a prominent and highly regarded organisation such as the Zawawi Group, whose business acumen and market knowledge will contribute to the success of the venture."

"Zawawi Minerals is committed to investing and participating in the industrial promotion of the nation, supporting the development march witnessed under the wise leadership of His Majesty Sultan Qaboos," said Alawi bin Qais al Zawawi, Chairman of Zawawi Minerals. "Part of our corporate agenda is our commitment and responsibility to adopt and deliver high international standards of operations for a safe and healthy environment for the local communities. This also includes bringing substantial, long-term benefits and job opportunities to the people of Dhofar Governorate. In addition, our mining and manufacturing projects in Salalah will enhance valuable foreign exchange earnings for the country as these operations are mostly export oriented," he added.

Ramachandran, CEO of Zawawi Minerals, said, "The company has been investing significantly to conduct detailed technical exploration of minerals and commercial feasibility study. The gypsum board and plaster of Paris manufacturing facility will be set up in the Salalah Free Zone adopting American environmentally-friendly manufacturing technology complying with all applicable national and international standards related to safety and environmental quality measures."

Ramachandran added that the joint projects would provide jobs for more than 320 people directly and indirectly and that they would be trained to a high level. He said that the combination of US-standard wallboard with 'Made-in-Oman' branding would enhance the Omani industrial brand image in the international marketplace.

US: In one of the most important steps in the saga over allegedly-tainted Chinese-made wallboard, attorneys have announced that a US$13m settlement has been reached between homeowners in Virginia, whose properties were built with the product and some of the companies they sued.

The settlement involves companies that imported and sold the wallboard as well as numerous other firms involved in the cases and around 200 local homeowners.

Federal product-safety regulators have found that the wallboard emits gases that corrode metal in homes and recommended that such wallboard be removed, although the legal battle over who will pay to fix the properties is now in its 38th month. Many homeowners have already abandoned their properties or lost them through foreclosure or bankruptcy. Others have sold their homes, sometimes for less than half of what they paid.

In July 2012 the settlement will go before a federal judge in New Orleans for a preliminary approval, with a final approval possible by 13 November 2012.

US: Eagle Materials Inc. has reported its financial results for the 2012 fiscal year and the fiscal fourth quarter that ended on 31 March 2012. Its results showed that the group's revenue was up by 7% for the fiscal year, to US$495m, and cash flow from operations was US$60.2m, up by 37%. In the quarter ending 31 March 2012, the company netted revenues of US$116.8m, a 22% year-on-year increase.

Eagle said that its low cost operations continued to execute well during the 2012 fiscal year and that it was beginning to see improving construction activity across most of its markets. Eagle's earnings began to improve during the second half of fiscal 2012 and accelerated during the fourth quarter.

The group's Gypsum Wallboard and Paperboard division saw an operational income of US$23.3m, an massive increase of 74% compared to the 2011 fiscal year. Revenues from Gypsum Wallboard and Paperboard were US$295.9m for the 2012 fiscal year, 9% higher than that seen in 2011.

The Gypsum Wallboard and Paperboard division reported fourth quarter operating earnings of US$15.1m compared to an operating loss of US$0.4m in the same quarter of the 2011 fiscal year. The increase in operating earnings was primarily due to higher net wallboard sales prices and increased paperboard sales volumes offset by lower wallboard sales volumes.

Gypsum Wallboard and Paperboard revenues for the fourth quarter totalled US$79.9m, a 23% increase from the same quarter in 2011. The average gypsum wallboard net sales price for this quarter was US$118.86/MSF, 39% greater than the same quarter in 2011. Gypsum wallboard sales volumes of 397MMSF were down by approximately 7% from the fourth quarter of the 2011 fiscal year.

US: The Drake Group LLC has announced that LKL Associates (LKL), based in West Jordan, Utah has joined The Drake Group LLC as a Member/Owner.

LKL is a privately owned company founded in Utah in 1978. It is a leading, independent building products dealer focused on the residential and commercial construction markets. LKL's product offering includes gypsum wallboard, steel studs, insulation, stucco and all associated finishing materials, tools and accessories that are utilised by wall and ceiling contractors.

In addition to its West Jordan headquarters LKL operates branch locations in Orem and Layton, both in Utah.

US: USG Corporation has reported a net sales increase of 13% in the first quarter of 2012 whilst decreasing its overall net loss. The building materials manufacturer made net sales of US$812m in the three months ending on 31 March 2012 compared to US$721m in the same period in 2011. Operating profit rose from a loss of US$58m in 2011 to a gain of US$27m. However, the company remains in net loss after tax, reducing its loss from US$105m in 2011 to US$27m in 2012.

"Despite continuing low demand our emphasis on achieving operating profit is succeeding and continues to be a top priority," said James S Metcalf, Chairman, President and CEO. "Our focus on our customers, innovation and growing our adjacent businesses contributed to our first quarter results. All units showed improved results, supported by a modest increase in US wallboard demand and solid performance across our product lines including ceilings, substrates and joint compounds."

Of USG's gypsum assets its subsidiary the US Gypsum Company registered the strongest turnaround in the first quarter improving sales by 20% from US$318m in 2011 to US$381m in 2012. Operating profit rose from a loss of US$29m in 2011 to a gain of US$29m in 2012.

"Although demand in our core markets still remains near historical lows, we are confident our strategy will continue to move us toward positive net earnings," said Metcalf.