Gypsum industry news

Oman: USG Zawawi Drywall SFZ 's US$37m state-of-the-art gypsum plant in Oman's Salalah Free Zone (SFZ) was inaugurated on 6 May 2015 marking the formal start of commercial production of a range of Sheetrock brand gypsum wallboard products earmarked primarily for export across the Middle East and Indian subcontinent. USG Zawawi Drywall SFZ is a 50:50 partnership between USG Corporation, Boral and Zawawi Minerals.

"We are pleased to see the opening of this successful US-Omani venture. Building relations between the US and Oman is a top priority of the US Embassy and this work is a shining example of the strategic coordination that benefits both our countries," said Ann Mason, economic-commercial officer from the US Embassy. "We applaud USG Boral and Zawawi Minerals for taking full advantage of the potential of Salalah Port and Free Zone and the US Oman Free Trade Agreement."

Commissioning of the Salalah plant, which has 8Mm²/yr of gypsum wallboard production capacity, began in March 2015. It was designed to enable future expansion to double wallboard production capacity or add new products like construction plaster. The plant will produce a wide range of Sheetrock gypsum boards, including products resistant to water, fire, sound, impact and mould. According to Curt Loring, general manager of USG Zawawi Drywall SFZ, it will produce products with special certifications not currently manufactured or available in the GCC. These products are specially engineered for custom wall systems in demand by architects for commercial construction.

The products will be marketed across the Gulf and Indian Subcontinent. Uptake is expected to be robust around the Gulf Cooperation Council (GCC), where a commercial construction boom is already underway. The raw gypsum is sourced entirely from a major gypsum quarry located in the Thamrait area of Dhofar Governorate. The quarry is operated by Zawawi Gypsum and is jointly-owned by USG-Boral and Zawawi Minerals.

"USG Zawawi Drywall's investment is in keeping with the Omani government's economic policies advocating the sustainable commercialisation of natural resources to diversify the economy, create employment for Omanis and facilitate inflows of investment and know-how. The Salalah facility operates to the same stringent safety and environmental standards applied by USG at its facilities in the US," said Alawi Al Zawawi, chairman of USG Zawawi Drywall SFZ.

Awadh Al Shanfari, CEO of Salalah Free Zone explained that the project is a re-enforcement of the Free Zone's commitment to maximise the Sultanate's mineral wealth through national and foreign partnership. "In the past, we have been focusing on projects that can create new industries linked to the available raw materials in the Sultanate. As a result of our endeavours, we will be announcing more investments during 2015," said Al Shanfari.

US: USG's sales for the first quarter of 2015 have risen by 7% year-on-year to US$909m. The company's operating profit rose by 15% to US$76m in the same period. The positive results were driven by its gypsum and ceilings divisions.

"USG is off to a great start in 2015, led by the performance of our US Gypsum and US Ceilings businesses... We generated operating margin improvement in these businesses by achieving price increases, focusing on manufacturing cost control, and tailoring our spending on investments in these businesses," said James S Metcalf, Chairman, President, and CEO.

USG also announced that it has entered into agreements to sell the two ships in its non-core shipping business, Gypsum Transportation Limited (GTL), for US$42m. The sales of the ships are expected to close in April 2015.

Australia: Boral will repurchase up to US$182m of its shares after a string of divestments bolstered the company's balance sheet. It intends to buy back up to 5%, or about 39 million shares, of its issued capital on-market over the next 12 months.

Boral chief executive Mike Kane said that the completion of a number of transactions, including the US$127m sale of its Western Landfill business in Melbourne to Transpacific Industries, had allowed for the share repurchase.

"This buyback reflects Boral's commitment to efficient capital management and delivering improved returns to shareholders," said Kane. "At the same time, we are maintaining flexibility to respond to changes in market conditions and to take advantage of appropriate growth opportunities that may present in the future." Kane had already flagged acquisitions in Asia and North America and said that Boral was too unbalanced towards Australia.

Boral received US$500m as part of an agreement with USG Corporation to sell half of its Australasian wallboard assets into a joint venture. It is on target to receive further performance-based payments of up to US$57.7m over the next three years.

Boral was reportedly considering a sell-off of its building products division, but indicated it would instead look for savings through cost-reduction programs and joint ventures. A brickmaking joint venture with CSR will proceed after receiving approval from the Australian Competition & Consumer Commission, with the expectation of savings of between US$5.39 – 7.69m between Boral and CSR.

US: USG Corporation has reported fourth quarter 2014 net sales of US$954m, up by 4% from the fourth quarter of 2013, when net sales were US$915m. Its fourth quarter 2014 operating loss was US$24m compared to US$60m of operating profit in the fourth quarter of 2013, primarily due to US$75m of charges for impairments and other related costs associated with its non-core shipping business and US$13m of charges to permanently settle a pension plan in the UK. During the fourth quarter of 2014, net loss attributable to USG was US$53m compared to US$3m in the fourth quarter of 2013.

"I'm pleased with the progress we made towards our 'Plan to Win' during the quarter, delivering strong adjusted operating profit from our operations," said James S. Metcalf, chairman, president, and CEO. "All of our businesses are heading in the right direction and we are well positioned for profitable growth in all of our improving end markets."

USG's adjusted operating profit was US$79m in the fourth quarter of 2014, which includes, among other items, adjusted equity method investment income of US$14m from USG Boral Building Products, compared to an adjusted operating profit of US$75m in the fourth quarter of 2013. Adjusted net income was US$35m in the fourth quarter of 2014 compared to US$22m in the fourth quarter of 2013. Adjusted net income and adjusted operating profit in the fourth quarter of 2014 excluded long-lived asset impairment charges of US$60m and contract termination and loss on receivable charges of US$15m related to the corporation's non-core shipping business, as well as a pension settlement charge of US$13m related to the wind-up of its pension plan in the UK.

USG recorded full year 2014 net sales of US$3.7bn and an operating profit of US$162m, with a net income of US$37m. On an adjusted basis for the full year of 2014, adjusted operating profit was US$353m and adjusted net income was US$168m. For the full year of 2013, net sales were US$3.6bn, operating profit was US$258m and net income was US$47m. On an adjusted basis for the full year of 2013, adjusted operating profit was US$278m and adjusted net income of US$73m.

"In 2014 our adjusted net income of US$168m more than doubled relative to what we generated in 2013, with our USG Boral joint venture contributing significantly to our success," said Metcalf. "While the pace of the recovery is clearly more shallow than what we were anticipating, our trajectory continues to be positive and we are confident that 2015 will outperform 2014."

US: USG has reported US$972m of sales for the third quarter of 2014, up by 5% from the same period in 2013. The company recorded a net loss of US$11m for the period, compared to a profit of US$23m in 2013. For the first nine months of 2014, sales were US$2.8m, a year-on-year increase of 4%. Profit grew by 82% to US$91m.

During the third quarter of 2014, USG reached an agreement in principle to settle all claims made in the direct and indirect purchaser class actions consolidated in the lawsuit, In re: Domestic Wallboard Antitrust Litigation, MDL No. 2437, pending in the United States District Court for the Eastern District of Pennsylvania. Pursuant to the agreement in principle to settle, which is subject to finalisation of a settlement agreement and court approval, USG will make a payment of US$48m. USG strongly denies any wrong-doing for the claims made in the lawsuits, but settled to avoid the expense, distraction and risk of further litigation. USG expects to make this cash payment within the next 12 months, while recording the US$48m charge in the third quarter of 2014.

"It is very disappointing to settle this lawsuit when we strongly believe we have done nothing wrong," said James Metcalf, president and CEO of USG. "However, we have to be realistic about the cost and risk a lawsuit like this creates for USG."

Australia: Building materials supplier Boral says that its prospects are improving as government infrastructure spending increases and industrial turmoil recedes. "After reporting lower earnings for two years running, we have clearly turned the corner," said Boral's chief executive Mike Kane.

Boral swung to an annual net profit after tax of US$161m in the financial year ending 30 June 2014, bouncing back from a US$192m net loss in the financial year ending 30 June 2013. The full-year result showed market conditions had improved across all of its divisions in Australia, the US and Asia.

Kane also expressed confidence in the American USG-Boral joint venture, which will soon launch a new lightweight gypsum board into 12 markets across Australia, Asia and the Middle East.

US: USG Sheetrock® Brand UltraLight Gypsum Base Imperial is now being manufactured at six USG plants. The panel is the sixth product in USG's lightweight wallboard portfolio and will be available at retail, specialty dealer and pro-dealer distributors nationwide in September 2014. The launch extends USG's position as the industry's leader in lightweight innovation. The gypsum base panel is used when a project calls for a plaster veneer finish, and is up to 30% lighter than the current ½inch USG Imperial® Gypsum Base panel. The traditional panel will be discontinued upon the launch of the new panel.

US: USG Corporation has reported its strongest quarterly net income since 2007. Second quarter 2014 net sales of US$948m were up by 3% from second quarter 2013 net sales of US$916m. USG's second quarter 2014 operating profit was US$98m compared to US$74m in the second quarter of 2013. Second quarter 2014 net income was US$57m. This compares to a net income of US$25m in the second quarter of 2013.

"I'm pleased to report our best quarterly results in seven years," said James S Metcalf, chairman, president, and CEO of USG. "Despite slower than expected acceleration in industry opportunity, most of our businesses and products improved their performance from a year ago and we also recorded our first full quarter of operations in our USG Boral joint venture."

The corporation's adjusted operating profit was US$93m in the second quarter of 2014, which includes adjusted equity method investment income of US$6m from USG Boral Building Products, compared to an adjusted operating profit of US$76m in the second quarter of 2013. Adjusted net income was US$48m in the second quarter of 2014 compared to an adjusted net income of US$26m in the second quarter of 2013. Adjusted net income in the second quarter of 2014 excluded, among other items, a US$12m gain on the sale of its New Jersey paper mill, which has been idled since 2009.

"We remain confident in the recovery, but challenges in the macro-economic environment still exist," said Metcalf. "However, we believe that the second half of the year will be better than the first half and we are well positioned to capitalise on the improving opportunity."

US: The board of directors of the Genesee County Economic Development Centre (GCEDC) has approved the final resolution for application for assistance from United States Gypsum (USG).

USG is planning to upgrade its papermill in Oakfield, New York State. The project will include replacing and relocating equipment, stock cleaning and enhanced manila production to improve the safety, quality and efficiency of the facility. The upgrades will consist of three phases and is expected to commence in 2016. The projected capital investment is approximately US$23m and the investment will retain 98 manufacturing jobs and create 12 new production jobs.

Canada: USG's Canadian subsidiary, CGC Inc, has introduced CGC Sheetrock® Brand UltraLight Mold Tough® Panel to the Canadian market. It is the lightest 1/2" mould-resistant gypsum panel available in the industry. This innovative gypsum panel is 20% lighter than traditional water and mould-resistant panels, making it easier to lift, carry and install.

CGC Sheetrock® Brand UltraLight Mold Tough Panels have a non-combustible, water and mould-resistant core encased in 100% recycled water and mould-resistant green face and brown back papers. The green face paper is folded around the long edges to reinforce and protect the core and the ends are cut square and even. The long edges of the panels are tapered, allowing joints to be reinforced and concealed.