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Universal Forest Products Sales Fall 25% in Third Quarter

Wood-products manufacturer sees earnings improve; weakness continues in most of UFPI's markets.

Universal Forest Products Inc. (Nasdaq: UFPI), Grand Rapids, MI, reported sales of $457.8 million for the third quarter 2009, down 25% from the prior-year period. Profit was $10.1 million for the quarter.
Universal Forest Products – a holding company for businesses that design, manufacture and market wood and wood-alternative products for various industries – said that improved earnings reflect cost reductions and downsizing; but sales continue to be adversely affected by a soft lumber market and a weak economy.
The composite lumber price, which affects the company’s selling prices, was 13% lower in the third quarter of 2009 than in the same period of 2008. The company believes weak demand will keep lumber prices depressed through the fourth quarter.
By market, Universal posted the following gross sales results for the third quarter of 2009:
Do-It-Yourself/retail: $214.7 million, a decrease of 15.2%
High unemployment, a depressed housing market and a fragile economy, consumer confidence and spending remain weak.
Industrial packaging/components: $132.7 million, a decrease of 19.6%
U.S. manufacturing continued to struggle, affecting the company’s industrial business, in which it engineers and manufactures packaging and components for manufacturing and agricultural customers. The company’s concrete forming business is having a positive impact on sales.
Site-built construction: $68.3 million, a decrease of 42.8%
Total housing starts from June through August 2009 were 36% lower than for the same period of 2008.
Manufactured housing: $53.8 million, a decrease of 36.8%
According to the most recent statistics available, the industry saw a decline of 36.8% in actual shipments of HUD-code homes in July 2009 from July 2008. The company believes that the market will improve only when the oversupply of site-built homes is absorbed, foreclosures subside, and credit conditions improve.

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