USG profit plunged

OMG, I guess Warren Buffett wasn't right about every company that he buys. As I stated before on my previous post I think USG's profit will fall with the housing crash because their main business is drywalls, what do you think is going to happen to them when no one is building any houses.

USG Corp. 3Q profits nosedive due to U.S. housing market doldrums

Profits at Chicago-based USG Corp. plunged 95.4 percent during the third quarter, part of a downward trend the company is seeing due to the U.S. housing and subprime mortgage market.

USG profits fell to $7 million, or 7 cents per diluted share in the quarter ended Sept. 30, down from $153 million, or $1.71 cents per diluted share, in the same quarter a year ago. Analysts had expected earnings per share at 32 cents, according to Zacks Investment Research Inc.

The third-quarter net earnings of $7 million included a $3 million after-tax charge to write off deferred financing fees and a $2 million after-tax charge for the company’s restructuring program. Net earnings also reflected an unfavorable tax adjustment of $6.7 million from the correction of the deferred tax balance of prior years.

Sales in the third quarter fell 9.7 percent from $1.5 billion to $1.3 billion.

“Conditions in the housing market have deteriorated further as the inventory of unsold homes continues to build and the availability of mortgage financing has tightened,” said William C. Foote, chairman and CEO in a press release. He also cited a softening residential repair and remodeling market for reducing sales and profits.

USG manufactures and distributes building materials, particularly gypsum-related products such as gypsum wallboard.

“Since the market began to decline, we have curtailed or closed 2.6 billion square feet of wallboard manufacturing capacity, closed four L&W Supply locations and eliminated 1,100 hourly and salaried positions,” Foote said.

During the first 9 months of 2007, USG’s net income decreased 44.7 percent to $104 million from $188 million in the same period a year ago. Net sales fell 11.4 percent to $4.0 billion from $4.5 billion in the prior-year period, while earnings per share dropped 64.7 percent to $1.07 from $3.03.

USG’s stock closed at $36.76 on Wednesday, up .71 cents or 2.0 percent compared with the previous day’s closing price of $36.05.